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HEALTH CARE IN THE PHILIPPINES:


CHALLENGES AND WAYS FORWARD
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HEALTH CARE IN THE PHILIPPINES:
CHALLENGES AND WAYS FORWARD
Oscar Cetrngolo
Professor of Economics, University of Buenos Aires
Principle Investigator, Friedrich-Ebert-Stiftung
Carmelo Mesa-Lago
Distinguished Service Professor Emeritus of Economics, University of Pittsburgh
Consultant, Friedrich-Ebert-Stiftung
Garry Lazaro
Senior Researcher and Executive Director, Institute of Politics and Governance
Shenna Kim B. Carisma
Research Assistant and Program Offcer, Institute of Politics and Governance
Health Care in the Philippines: Challenges and Ways Forward
Copyright 2013
By Friedrich-Ebert-Stiftung Philippine Offce, Oscar Cetrngolo, Carmelo Mesa-Lago, Garry Lazaro, and
Shenna Kim Carisma
Published by Friedrich-Ebert-Stiftung Philippine Offce.
2601 Discovery Centre, #25 ADB Avenue
Ortigas Center, Pasig City 1600 Philippines
Tel. Nos.: +63 2 6346919, 6377186 to 87
Fax. No.: + +63 2 6320697
Email: info@fes.org.ph
Website: www.fes.org.ph
The views and opinions expressed in this publication are those by the authors and do not necessarily
refect that of the Friedrich-Ebert-Stiftung. The authors are responsible for the accuracy of facts and
fgures presented in this publication, which is supported in good faith by the Friedrich-Ebert-Stiftung.
All rights reserved.
Not for commercial use. No part of this book may be reproduced in any form or by any means without
the permission from the Friedrich-Ebert-Stiftung Philippine Offce.
Photo and cover design by Aildrene Tan
Layout by Nikki Al Ben Delfn
ISBN 978-971-535-037-2
vii
TABLE OF CONTENTS
TABLE OF CONTENTS vii
LIST OF FIGURES AND TABLES ix
FIGURES ix
TABLES x
APPENDIX TABLES xi
SYMBOLS xii
FOREWORD xiii
ACKNOWLEDGMENTS xv
ABBREVIATIONS xvi
EXECUTIVE SUMMARY 1
A. Health Status in the Philippines 1
B. Organization of the Health System 2
C. Coverage 3
D. Expenditures and Financing 5
E. Supply of Services 6
F. Suffciency of Benefts 7
G. Social and Regional Solidarity 8
H. Financial/Actuarial Sustainability 10
INTRODUCTION 14
CHAPTER 1: EPIDEMIOLOGICAL PROFILE OF THE PHILIPPINES 17
1a. Population Structure and Demographic Trends 17
1b. Basic Indicators: Infant and Maternal Mortality and Malnutrition Prevalence 20
1c. Causes of Morbidity and Mortality 22
1d. Natural and Man-made Disasters 24
CHAPTER 2: CURRENT ORGANIZATION OF THE HEALTH CARE SYSTEM 25
2a. Brief Description of the Historical Evolution of the Health Care System 25
2b. Brief Description of Current Social Security Contributory and Non-Contributory Health Care
Schemes 29
2c. Role of the State in Regulation and Supervision of the Entire Health Care System 31
2d. Regulation of Health Maintenance Organizations (HMOs) 33
CHAPTER 3: HEALTH CARE COVERAGE 35
3a. PhilHealth Coverage 35
A. MEMBERS 35
B. DEPENDENTS 38
3b. Reasons for Potential Decline in Coverage and Impact of the Financial Crisis 43
CHAPTER 4: HEALTH EXPENDITURE AND FINANCING 48
4a. Health Expenditures in a Comparative Perspective 48
4b. Fiscal Accounts and Health Expenditures 50
4c. National Health Accounts 55
4d. Health Financing 57
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS 59
5a. Health Services Supply 59
5b. Eligibility Conditions to Access Benefts of the National Health Insurance Program 64
5c. Beneft Suffciency and Program Impact 69
CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY 71
6a. Health Coverage in an Unequal Society 72
6b. Decentralization and Territorial Equity 76
6c. The Actual Coverage Problems in the Different Programs 81
6d. Gender Equality in the Philippines 84
CHAPTER 7: FINANCIAL/ACTUARIAL SUSTAINABILITY 86
7a. The Financial Flow of the Health System 86
7b. Payment Mechanisms 88
7c. Pooling of Funds 89
7d. Operating Expenses 90
7e. Financial/Actuarial Sustainability 91
CHAPTER 8: CONCLUSIONS AND POLICY RECOMMENDATIONS 95
Coverage Expansion 96
Improvements in Effective Availability and Use of Health Services 96
Equity Improvements in the Coverage and Use of Services, Particularly Centered on Target
Mechanisms 97
Widening and Distributing Impact of Health Services Financing, Whether Contributory or Non-
Contributory and Reduce the Out-of-pocket Expenses 98
Organization, Decentralization of Services, Territorial Equity and the LGUs Role 99
Improvements in the Effciency of the Use of Resources and Management of the System 101
Achieving Adequate and Sustainable Financing in the Health System 101
Final Thoughts 102
APPENDICES 104
STATISTICAL TABLES 104
LIST OF INTERVIEWEES 117
LIST OF VALIDATION WORKSHOP PARTICIPANTS 119
BIBLIOGRAPHY 122
ix
LIST OF FIGURES AND TABLES
FIGURES
Figure 1: Map of the Philippines 14
Figure 2: Population Pyramid by Sex and Age in the Philippines, 2000 17
Figure 3: Projected Life Expectancy at Birth 18
Figure 4: Life Expectancy at Birth by Sex and Region, 2005 19
Figure 5: Deaths under One Year, Maternal Deaths and Fetal Deaths, 1976 to 2008 20
Figure 6: Infant Mortality Rate by Country and Group of Countries, 1968-2011 21
Figure 7: Malnutrition Prevalence, Weight for Age 21
Figure 8: Members and Benefciaries of NHIP components, 2011 40
Figure 9: Benefciaries of Contributory and Non-contributory Components of NHIP, 2001-2011 41
Figure 10: Unemployment Rate, NHIP Coverage Rate and GDP of Philippines, 1998 - 2011 44
Figure 11: Crisis Impact on PhilHealth Coverage by Group, 2010 46
Figure 12: Public Health Spending in Emerging Economies 49
Figure 13: Degree of Inclusiveness versus Health Spending 50
Figure 14: Macroeconomic Variables, 1999-2011 51
Figure 15: Evolution of the Philippines Debt, 1998-2010 52
Figure 16: Revenue, Expenditure and Balances, 1999-2011 53
Figure 17: Composition of National Government Spending, 2007-2011 53
Figure 18: Public and Private Health Spending in the Philippines, 1995-2010 56
Figure 19: Philippine National Health Accounts Structure, 2007 56
Figure 20: Number and Bed Capacity in Government and Private Hospitals, 1976-2010 60
Figure 21: Number of Government Doctors, Nurses and Dentists 62
Figure 22: Distribution of Out-of-Pocket Health Expenditure by Components, 1997-2009 74
Figure 23: Distribution of Total Tax Revenue in all LGUs, 2009 79
Figure 24: Region Groups 80
Figure 25: Literacy Rate Gender Gap in Asian Countries, 1995, 2001 and 2003 82
Figure 26: Flowchart of Health Financing in the Philippines 87
Figure 27: Financial Balance and Reserves of NHIP, 2000-2010 (in million PhP) 92
Figure 28: NHIP Fund Projections, 2011-2021 92
Figure 29: Fund Status and Actuarial Reserve Projections, 2010-2021 93
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
TABLES
Table 1: Ten Leading Causes of Morbidity, Number and Rates, 2008 22
Table 2: Ten Leading Causes of Mortality, Number and Rates, by Sex, 2006 23
Table 3: Damages Caused by Major Natural Disasters and by Man-made Disasters, 2010 24
Table 4: Brief Historical Overview of the Philippine Health Care System 26
Table 5: Main Historical Facts about PhilHealth, 1995-2010 29
Table 6: Number of Members and Benefciaries Covered by PhilHealth, 2000-2012 38
Table 7: Percentage of the Total Population Covered by PhilHealth, 2000-2012 39
Table 8: Economically Active Population (EAP), Employed Sector and Individually Paying Programs as
Percentage of their Reference Population, 2001-2010 42
Table 9: International Comparison of Health Care Expenditures, 2010 48
Table 10: Consolidated Public Sector Financial Position, 2010-2013 (Billon PhP) 52
Table 11: National Public Expenditures, 2009-2011 54
Table 12: Health Expenditure in the Philippines, 2007 55
Table 13: Barangay Health Stations (BHS) in 2008 and Rural Health Units (RHU) in 2005 59
Table 14: Public and Private Hospitals by Region, 2010 61
Table 15: Health Care Workforce, 2000-2010 62
Table 16: Government Doctors, Nurses, Dentists and Midwives, 2008 63
Table 17: Benefciaries and Payment Benefts of NHIP, 2011 68
Table 18: Basic Indicators of Philippines Neighbor Countries, 2007 72
Table 19: Health Insurance by Income Quintile, 2008 (%) 73
Table 20: Distribution of Health Spending by Quintile and Payer (% of total spending), 2003 73
Table 21: Poverty Incidence in Total Population by Region, 1991, 2003, 2006 and 2009 (%) 74
Table 22: Health Insurance Coverage by Region and Provider, 2008 75
Table 23: Amendments of IRA Criteria and Allocation by LGU with Decentralization Process, 1991 78
Table 24: Beneft Delivery Ratio by Selected Regions 81
Table 25: Percentage of Household Population with Health Insurance Coverage 83
Table 26: Premium Collection versus Benefts Payments by Insured Groups of NHIP, 2011 89
Table 27: Operating Expenses of NHIP, 2000-2010 90
Table 28: NHIP Projections, 2011-2021 (in million PhP) 91
xi
Table 29: Fund Status and Actuarial Reserve Projections, 2010-2021 under Scenario 1 93
Appendix Table 1: Selected Statistics by Region 104
Appendix Table 2: Population, Land Area and Density by Region, 1980, 1990, 2000 and 2007 105
Appendix Table 3: Basic Social Indicators in Asian Countries 106
Appendix Table 4: Household Population by Religious Affliation and by Sex, 2000 107
Appendix Table 5: Number of Registered Filipino Emigrants, 1991 to 2010 108
Appendix Table 6: Labor Force Participation Rate and Employment Status, 2001 to 2010 109
Appendix Table 7: Selected Health Output Indicators, 1998-2006 110
Appendix Table 8: Live Births, Total deaths, Deaths under One Year, Maternal and Fetal Deaths 111
Appendix Table 9: Number of Hospitals by Type and by Region, 2000 to 2010 112
Appendix Table 10: Damages Caused by Major Natural Disasters and by Man-made Disasters 113
Appendix Table 11: Government Health Expenditures by Use of Fund and by Type of Expenditure 114
Appendix Table 12: Early Childhood Mortality Rates by Region, 2003 and 2008 115
Appendix Table 13: Assumptions under Different Projected Scenario 116
APPENDIX TABLES
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
SYMBOLS
PhP Philippine Pesos
US$ United States Dollars
1 PhP Billion PhP 1,000 Million
Blank (in Boxes or Tables) means No Available Data
xiii
FOREWORD
Gains in the health care system in the country cannot be understated. The past
year alone we have seen the passage of two hallmark legislation the Reproductive
Health Law and the Sin Tax Law both of which will guarantee higher resources
for the public health care system and increase access of marginalized sectors to
health services. Within Asian countries, the Philippines also appear to be halfway in
achieving the Millennium Development Goals indicators on health.
Moreover, improvements in the Philippine Health Insurance Corporation (PhilHealth)
have been observed, more notably the increase in coverage of members and benefciaries
from 38% of the total population in 2000 to 82% in 2011. Benefts provided as well as
collections from members have likewise increased. Social Weather Stations survey
late last year further shows PhilHealths public satisfaction rating increase from plus
67 percent to plus 82 percent. There is thus much to be hoped for in achieving
universal healthcare in the Philippines.
Taking these improvements into account however, considerably more than what
was achieved still needs to be done. For example, the quality of healthcare services
remains inconsistent across the country with the ineffcient decentralization of
healthcare functions and resources. Coverage thus is highly unequal among the
different regions and provinces of the country, with coverage reaching up to 67.5%
in Northern Mindanao but remaining as low as 17.5% in ARMM. There is also
substantial difference in access to health services between urban and rural areas,
as well as, across quintiles of the population, given that only 21% in the poorest
quintile have access to health insurance while access of the richest quintile is at
65%. Moreover, out-of-pocket spending on health remains high at 53% of total health
spending showing the high fnancial burden on each individual that government fails
to attend to, exacerbated further by the highly unequal wealth distribution in the
country. The Philippines consequently lags behind her Southeast Asian neighbors in
healthcare reform.
The Friedrich-Ebert-Stiftung is committed to the values of social democracy and social
justice, and hence has been working on the promotion of accessible health care and
social security services as an integral part of policy decisions and processes in the
Philippines. With the current situation of the health care system in the country, there
is indeed fertile ground for progressive reforms and much room for innovations.
The Friedrich-Ebert-Stiftung thus presents this study to provide a comprehensive
and objective diagnosis of the state of the Philippine health care system and its
ongoing reforms, and forward policy recommendations to lawmakers and government
offcials, as well as to the academe and civil society organizations. Hopefully the
study will be able to provide further input into the reform process and expansion of
the health care system as well as in shaping the ongoing public debate.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
The study looks at the following key aspects of the health care system: (1) the
epidemiological profle of the Philippines, (2) the current organization of the health care
system, (3) the health care coverage provided under the National Health Insurance
Program of the government, (4) health expenditure and fnancing, (5) the supply
of services and suffciency of benefts, (6) the social solidarity, regional and gender
equity, and (7) the fnancial/actuarial sustainability of the health system. The study
then summarizes the challenges that the health care system is facing and provides
specifc recommendations and policy proposals on critical reforms that need to be
addressed by stakeholders and decision-makers.
We thank Dr. Oscar Cetrngolo from the University of Buenos Aires, the principal
investigator for this study, for sharing his expertise in the health sector and providing
leadership in the critical analysis of the health care system in the Philippines. We also
thank Dr. Carmelo Mesa-Lago from the University of Pittsburgh for his invaluable
inputs to the study, as well as Mr. Gari Lazaro and Ms. Shenna Kim Carisma of
the Institute for Politics and Governance (IPG) Philippines who provided technical
assistance in the data-gathering and writing of this study. Finally, we would like
to thank representatives from the PhilHealth, the Department of Health (DOH), the
Department of Budget and Management (DBM), the World Health Organization (WHO),
the private sector, the academe and the various civil society organizations who have
provided time and resources in identifying leads, pooling in data and refning the
study into its fnal form.
We lastly invite all the stakeholders, especially policy and decision-makers
to take a close look at the challenges presented herein, and seriously weigh the
recommendations in their efforts to attain universal healthcare for Filipinos.
Berthold Leimbach
Resident Representative
Friedrich-Ebert-Stiftung Philippine Offce
xv
ACKNOWLEDGMENTS
This report was commissioned by the Friedrich Ebert Stiftung. It was written by
Oscar Cetrngolo based on the guidelines from Professor Carmelo Mesa-Lago, Senior
Consultant and Advisor, in collaboration with Gari Lazaro and Shenna Kim Carisma,
and with the assistance of Osvaldo Ulises Garay and Ariela Goldschmit.
The development of this study was made possible through the generosity of
numerous public offcials, academics, experts from international organizations, and
representatives from civil society organizations who were interviewed during a visit
by Cetrngolo to Manila on August 5 to 17, 2012 through the invaluable help of
Ms. Anne-Helene Vasudevan. The Appendix gives a list of interviewees, whom the
authors wish to thank for the information and comments they provided. Also, they
wish to thank the response, comments and recommendations from Junice Melgar,
Nerissa Santiago and the assistance to the seminar organized to discuss the main
fndings of the study, in Manila on February 7, 2013.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
ABBREVIATIONS
ACS Auto-Credit System
ADB Asian Development Bank
AFP Armed Forces of the Philippines
AHMOPI Association of Health Maintenance Organizations of the
Philippines
ARMM Autonomous Region in Muslim Mindanao
ASSA ASEAN Social Security Association
BDR Beneft Delivery Ratio
BFP Bureau of Fire Protection
BHSs Barangay Health Stations
BJMP Bureau of Jail Management and Penology
CDA Cooperative Development Authority
CDD Complete Disability Discharge
CHDs Centers for Health Development
DBM Department of Budget and Management
DHS Demographic and Health Survey
DOF Department of Finance
DOH Department of Health
DSWD Department of Social Welfare and Development
EAP Economically Active Population
FFS Fee-for-service
GDP Gross Domestic Product
GSIS Government Service Insurance System
HIF Medicare Health Insurance Fund
HIV/AIDS Human immunodefciency virus/acquired immune defciency
syndrome
HMO Health Maintenance Organizations
HSRA Health Sector Reform Agenda
IMF International Monetary Fund
IMR Infant mortality rate
IPD Institute for Popular Democracy
IPP Individually-Paying Program
IRA Internal Revenue Allotment
IRR Implementing Rules and Regulations
LGU Local Government Unit
MCP Maternity Care Package
MDG Millennium Development Goals
MIMAROPA Mindoro, Marinduque, Romblon, Palawan (Region IV-B)
MPI Medicare Program I
MPII Medicare Program II
NBB No Balance Billing
NCR National Capital Region
NDHS National Demographic and Health Survey
xvii
NHIP National Health Insurance Program
NHTS-PR National Household Targeting System for Poverty Reduction
NPP Non-paying retirees and pensioners
NSO National Statistical Offce
OFWs Overseas Filipino Workers
OWP Overseas Workers Program
OWWA Overseas Workers Welfare Administration
PhilHealth Philippine Health Insurance Corporation
PhP Philippine Peso
PMCC Philippine Medical Care Commission
PMRF PhilHealth Member Registration Form
PNP Philippine National Police
POEA Philippine Overseas Employment Administration
PPP Purchasing Power Parity
PROs PhilHealth Regional Offces
RA Republic Act
RHB Reproductive Health Bill
RHUs Rural Health Units
SARS Severe Acute Respiratory Syndrome
SEC Securities and Exchange Commission
SEPO Senate Economic Planning Offce
SOs Service Offces
SP Sponsored Program
SSS Social Security System
TB-DOTS Tuberculosis Directly Observed Treatment Shortcourse
UNDP United Nations Development Programme
VAT Value-Added Tax
WB World Bank
WHO World Health Organization
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
1
EXECUTIVE SUMMARY
The Philippines is at a crucial moment in its brief history as an independent nation. It
is a middle-income country and is facing a process of consolidating a more equitable
economic and social development pattern that might sustain its young institutional
and democratic organization. In this context, discussions and decisions on social
protection are central. The government has put into motion major initiatives to
increase the coverage of health insurance and modernize public sector institutions.
A. Health Status in the Philippines
The health status in the Philippines has improved but not as much as in other
Southeast-Asian countries. The analysis of the countrys demographic and health
aspects show that it is going through a demographic and epidemiological transition,
characterized by a decrease in fertility, increase in life expectancy and a substantial
change in risk factors. Rapid urbanization, high population density, and climate
change have begun to infuence the emergence and re-emergence of new infectious
diseases.
As in other countries, the increase in life expectancy of the Filipinos may be attributed
to the improving health status of the people and other socio-economic factors. In
the future, more people will reach old age, thus changing the current population
pyramid where, currently, those over seventy years old represent a low proportion of
the population. With this trend comes an increase in the occurrence of degenerative
diseases and disabilities associated with an aging population, and a subsequent
rise in health care costs. The health focus therefore should be able to design public
policies that cope with future changes in demand.
In the past few decades, the Philippines achieved notable gains in reducing both
the infant and child (age under fve) mortality rate, but the performance in reducing
maternal and fetal death rates is not as commendable. Nowadays, the three most
common causes of infant deaths are pneumonia, bacterial sepsis, and disorders
related to short gestation and low birth weight, while the most common causes of
child mortality are pneumonia, accidents, and diarrhea. The Philippines rate of
prevalence of malnutrition in children under fve is similar to the median in the
group of middle-income countries but the improvement over time is less than that
for this group as a whole.
The analyses of the causes of morbidity in the Philippines indicate that they result
from development issues. As in the past, most of the ten leading causes of morbidity
are communicable diseases-related. Dengue fever has had sudden increases in
outbreaks within a year. The prevalence of HIV/AIDS is estimated to be low, but high-
risk behaviors appear to be increasing and could lead to high incidence over time.
Unlike the indicators of morbidity, non-communicable diseases are responsible for
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
the majority of deaths in the country, thus heart diseases and malignant neoplasm
cancer comprise more than a third of the total causes of death.
Due to its geographical location, the Philippines has always been subject to natural
disasters such as typhoons, earthquakes, tsunamis, volcanic eruptions, among
others. All of these factors make the Philippines one of the most exposed countries
to natural disasters in the world, leaving it vulnerable to the emergence and re-
emergence of diseases related to climate change and other geophysical hazards.
The country still lacks a comprehensive program to assist victims of such disasters,
who, more often than not, tend to be poor people living in dangerous areas and in
makeshift lodgings. Agriculture, where two thirds of the income of the poor depends,
is the most vulnerable to the effects of climate change and the impact of plagues
and diseases. In conclusion, a comprehensive assistance program is an important
concern since disasters cause serious damage and loss of property especially to the
poor, and destroy their only means of living. If they do not receive assistance, the risk
of falling in a perpetual poverty trap is high.
B. Organization of the Health System
Since 1995, the National Health Insurance Program (NHIP), provided by Philippine
Health Insurance Corporation (PhilHealth), is a government mandatory health
insurance program that seeks to provide universal health insurance coverage and
ensure affordable, acceptable, available, accessible, and quality health care services
for all Filipinos. This program includes reforms to widen coverage in a gradual
manner through various PhilHealth components. The most important among them is
the introduction of the Sponsored Program (SP), which aims at covering the poorest
households (PhilHealth, 2012).
The goal of the NHIP is to provide compulsory health insurance coverage for all as
a mechanism to allow all Filipinos to gain fnancial access to health services. The
provision for universality and equity applies to the various classifcations of members
in the resident population and those working overseas on a contractual or long-term
basis. Although the system is still far from achieving its long-term goals, that is the
outlook of the current reform process.
There are fve types of NHIP members, tied to fve different PhilHealth programs, each
with diverse conditions of access, benefts and fnancing:
i. Employed Sector Program: compulsory coverage of all employees in government
and the private sector.
ii. Individually Paying Program: voluntary coverage of the self-employed and
others not covered by the rest of the programs.
iii. Sponsored Program: covers the extremely poor (quintiles 1 and 2).
iv. Overseas Filipino Workers
v. Lifetime Member Program: free for members that have already completed their
120 monthly contributions.
3 EXECUTIVE SUMMARY
In addition, PhilHealth covers, without additional premium, the members dependents:
the legitimate spouse who is not a member in her/his own right, children and step-
children below 21 years of age, and parents or step-parents aged 60 and older who
are not members. There is no limit to the number of members dependents.
The private subsector captures the greatest proportion of health care resources. A
small group of Health Maintenance Organizations (HMOs) is devoted to providing
or arranging for the provision of pre-agreed or designated health care services to its
enrolled members for a fxed prepaid fee in a specifc period of time.
The Philippine health system is ruled by the national government through the
Department of Health (DOH), the lead agency in the sector, which is responsible
for the general regulation and supervision of the countrys health system. Its most
important task is to manage the sectors national policies and develop national plans,
as well as establish health technical standards and guidelines. DOH is headed by a
cabinet-rank secretary, who is appointed by the President of the Republic.
Since the devolution of health services in 1991 by the Local Government Code,
the provision of such services, particularly at the primary and secondary levels, is
through the local government units (LGUs). Hence, health service is managed through
provincial, municipal and barangay local government offces. Provincial and district
hospitals are the responsibility of provincial governments while the Rural Health Units
(RHUs) and Barangay Health Stations (BHS) are managed by municipal government
units. To prevent the likely negative effects of institutional fragmentation, special
importance should be given to the relationships among programs, the different levels
of government and its institutions.
C. Coverage
Despite the long-term objectives and measures implemented in the past few decades,
the Philippines health care coverage is still insuffcient in terms of the number of
people covered, benefts assured to each group, and the quality of such services.
NHIP is the largest insurance program in terms of coverage and beneft payments.
While private insurance and HMOs have grown considerably in recent years, their
share of the total health spending remains small relative to the NHIP.
PhilHealth coverage has increased signifcantly, from 38% of the total population
in 2000 to 82% in 2011. However, 18% of the population is not covered and has
no access to quality health care. The composition of the coverage in PhilHealth
components shows that the Sponsored Program covered 49.1% of all benefciaries in
2011, thus refecting the equity objectives sought by the program since they are low-
income benefciaries. Health care coverage from other components are as follows: the
private employed component at 23.1%, Individually Paying Program (IPP) at 12.6%,
government employed at 7.5%, overseas workers at 6.5% and lifetime members at
1.2%. In an aggregate way, the contributory components share in the NHIP is growing
and covered 37.6% of the employed population in 2010.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
PhilHealth membership in 2010 was considered signifcant because of the following
points: a) the government sector had the highest share in the reference population
covering 64.4% of all civil servants; b) the private-sector employees component covered
54.0% relative to formal private sector employees; c) the IPP component accounted for
20.3% of informal employees, a signifcant increase in the incorporation of members
although such share is still considerably low and reveals the limited coverage of the
informal sector (above 50% of the labor force) hence the need to develop a strategy
to effectively reach the members of this sector; d) the Non-Paying Lifetime Members,
account for less than 10% of the population older than 60, a confrmation of the
weak contributory history of Filipino workers.
Benefciaries of the Overseas Workers Program (OWP) are particularly relevant as
usually members are abroad, but their dependents reside in the Philippines. This
component constitutes an innovative and unique health policy.
PhilHealth is carrying out various measures to fght fraud and abuse, particularly
declaring non-dependents as dependents, through the Fact Finding Investigation and
Enforcement Department. It aims to control and supervise the system and prevent
the proliferation of adversarial selection practices of the benefciaries, fraudulent
practices by providers, and the cleansing of the list of benefciaries in the system.
In 2010, the governments main goal in its new health sector plan was to achieve
universal health care. The plan was to increase the number of poor people enrolled
in PhilHealth and to improve the outpatient and inpatient benefts package. A full
government subsidy is offered to the poorest 20% of the population, and premiums for
the second poorest 20% will be paid in partnership with the LGUs. This measure has
led to an explosion of members and benefciaries of this component that compensates
for the adverse effects of the current global fnancial crisis.
Likewise, the private sector offers coverage through voluntary pre-paid medical
insurance. In some cases, additional coverage is given on top of that granted by social
security, thus resulting in a double coverage of the higher-income strata. Despite the
growth of this subsector, it accounts for barely 10% of the covered population.
The expected evolution of health coverage for the population in the next few
years is based on fve groups of effects that refect the situation of the PhilHealth
components:
The contributory component of coverage is closely related to labor market i.
dynamics.
OWP coverage will depend on the demand for Filipino workers abroad and, ii.
consequently, on the economic evolution of the countries importing Filipino
labor.
Voluntary contributions of IPP and OWP, as well as private coverage like HMO iii.
are closely linked to individual decisions, but are also associated with economic
5 EXECUTIVE SUMMARY
activity and formal employment. In the case of private coverage, its expansion
might also have been the result of dissatisfaction of scope and quality of services
provided by the different PhilHealth components.
Non-contributory state-fnanced coverage is strongly linked to the evolution iv.
of general and extreme poverty incidence (SP benefciaries); demographic
dynamics (i.e., as the population ages, there would be more non-paying retirees
and pensioners (NPPs)); and the fscal space wherein the government has to
increase fnancing for programs aimed at the needy.
Projections of coverage of the population older than 60 (NPP benefciaries), do v.
not show a signifcant expansion, even when this group faces more and costlier
health services due to its characteristics.
The current scope for the SP should provide coverage to the poorest 40% of the
population so that in a scenario perfectly focused and completely covered as stated
in the program, the worsening socio-economic conditions of the population resulting
from an unfavorable economic cycle might not result in a greater coverage, but in
a change of coverage towards more vulnerable sectors. In this context, the ability
of this component to have a countercyclical response is strongly limited, therefore
reducing the possibilities of gaining access to health coverage for a wide range of
population sectors.
To better cope with crisis effects, the NHIP should assign more resources to the SP
in order to fnance non-contributory health services for the needy. Under a crisis,
a higher number of benefciaries are incorporated into this component, thus partly
making up for the decrease in benefciaries in the contributory part. Therefore,
the non-contributory component might act in a countercyclical way. However, it is
diffcult to rapidly incorporate new SP benefciaries because of red tape and timing,
as well as unsustainable funding, and signifcant challenges to cover the poor in the
long run.
D. Expenditures and Financing
The resources earmarked for health fnancing in the Philippines are little (3.6% of
GDP in 2011), a result of different factors combined: a low tax burden (12.3% of GDP)
and a low public budget share of health spending (only 7.6% of the total). A system
that rests on the fnancing of the private sector, where there is a high proportion of
out-of-pocket spending to gain access to health services or medicine, is a signifcant
source of inequality.
LGUs are responsible for the provision of direct health services, particularly at the
primary and secondary levels. Provincial and district hospitals are under the provincial
government while the municipal government manages the RHUs and BHSs.
The health cares fnancing system is fragmented and inequitable. It is fragmented
into different NHIP components and between public and private spending. It is
inequitable due to the high burden on individuals such as private and out-of-pocket
spending. Additionally, the differences in coverage, typical of a decentralized scheme,
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
must be taken into account. For this reason, the fnancial transfer system between
government levels plays a key role. Lastly, inequality is rather evident in the level of
out-of-pocket expenses for medicines and other medical services. Private sub-sector
share was 2.3% of GDP and 64.8% of total spending, out of which 83.8% went to
out-of-pocket expenses, thus leaving vulnerable the fnancial and health status of
the poor and low-income group.
Summing up, the fnancing and resources of the Philippines health system are
inadequate to reach the goal of access to universal coverage.
E. Supply of Services
The access to health services for the population depends on their supply, the access
conditions, and the degree to which the benefts provided by public programs are
adequate to meet peoples needs. The distribution and coverage of health services
supply largely determines the real possibilities the citizens have to gain timely access
to health facilities and human resources. As in most developing countries, the general
pattern in the Philippines is the concentration of health services in relatively affuent
urban areas (Mariano, 2012-I).
As a result of the process of decentralization, public health services are mainly
delivered by LGUs with the technical aid of the national government through the DOH.
In addition, there are specifc campaigns and other national programs coordinated
by the DOH and the LGUs. Provincial governments manage secondary and tertiary
level facilities, and the national government manages a number of tertiary level
facilities. In a decentralized system as that of the Philippines, the nearest services to
households are the BHS.
The private sector delivers services at all three system levels. Private primary
services are provided through freestanding clinics, private clinics in hospitals and
group practice or polyclinics. Private health clinics, diagnostic/imaging centers, and
laboratories operate in larger towns. The distribution of hospitals by region also
shows disparities that characterize the countrys level of access to health services,
where there is an uneven pattern of distribution of facilities from both the public and
private sector.
On average, there are 54 beds per hospital, with higher bed availability in the public
sector (68) relative to the private sector (45), and a distribution of such beds in a
somewhat even fashion between government and private hospitals.
Medicine production and distribution must be better regulated due to its impact on
out-of-pocket spending. Retail pharmacies and drug stores are the main sources
of prescription and over-the-counter drugs; they used to be single proprietorship
businesses but have been dominated by national retail pharmacy chains and franchises
(60% of the market). In recent years, village and town pharmacies sponsored by DOH
(e.g. Botikang Barangay, Botikang Bayan) have been revived and multiplied in poorer
7 EXECUTIVE SUMMARY
Barangays lacking a private retail pharmacy, but most have low turnover and face
diffculties with replenishing their supply.
The Philippines has ratios of nursing and midwifery, dentistry, and pharmaceutical
personnel of one to every 10,000, in line with upper middle-income countries or even
going beyond their values. But when focusing on the available human resources in
the LGUs, there has been some stagnation in the last few years. An important issue
affecting the health sectors human resources is the growing migration of trained
resources to other countries. The Philippines has become a major source of health
professionals to many countries because of their fuent English, skills and training,
compassion and patience in caring. This leads to a costly brain drain, hence hurting
the health sector. Measures should be taken so that the human resources required
for the functioning of the sector remain in the country.
F. Suffciency of Benefts
PhilHealth combines different methodologies and mechanisms to provide benefts.
With the exception of SP, inpatient care benefts provide frst-peso coverage up
to a maximum amount which is payable to providers on a fee-for-service basis.
The coverage cap varies with case type (surgical, general medicine, maternity,
pediatrics, etc.) and level of the facility (primary, secondary, tertiary).
Fixed case payments are made for the TB-DOTS, the Maternity package and the
SARS and Avian Infuenza package.
In the case of the outpatient package provided to indigent members, PhilHealth
uses capitation payments.
For Sponsored Members and their dependents, the case rates and No Balance
Billing (NBB) combination of policies guarantees access to a complete set of
services without the need to shell out additional payment over and above
the case rates. However, in support of the countrys commitment to reducing
maternal and infant mortality rates, NBB is also applied to other benefciaries of
components of NHIP (different from SP) for the maternity care and newborn care
packages in all accredited Maternity Care Package (MCP) non-hospital providers
(e.g. maternity clinics, birthing homes).
There also exists the possibility of reimbursement upon submission of an offcial
invoice, which is deducted from the case payment.
When a sponsored member is admitted in a private hospital, the NBB policy will
not apply, unless the private hospital voluntarily implements it.
Additionally, since September 2011, PhilHealth has begun to use the case rate
scheme for medical and surgical procedures. This was implemented in order to
limit discretionary measures in the collection process for such services and in
order to make information transparent to the patients. This scheme has a fxed
rate for each treated case, in all hospitals, regardless of types and levels.
PhilHealth plus is a plan aimed at providing, besides the basic minimum
package, supplemental health beneft coverage to benefciaries of contributory
funds. The goal of this scheme is to bring down out-of-pocket expenses to the
lowest possible level, which will help mitigate the fnancial risk of the patient in
the face of illnesses. This includes what basic insurance would not cover fully,
or it will cover the cost of receiving care in a private room or having a choice
of physician/s and minimizing waiting time. All this complements the benefts
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
provided by PhilHealth; it should be noted however that this may widen inequity
as the highest-income sectors will undoubtedly be those that will be able to gain
access to differentiated health services.
Additionally, PhilHealth implemented an initial package of Z Benefts. These
are the cases that are at the end of the spectrum if we rank all illnesses and
interventions from A to Z based on their increasing complexity and cost. Thus,
PhilHealth started to have a special coverage for the treatment of catastrophic
illnesses, whose bearing on the spending of households is a determining factor
and, in many situations, worsens the income level of affected households and
ends up pushing them into poverty.
Suffciency is the degree to which the benefts provided by the program are adequate
to meet the needs of different benefciaries; it requires economic resources to
provide timely access to proper health care regardless of the economic situation of
individuals. There are no appropriate indicators to accurately measure suffciency
of benefts. However, these benefts encompass different health services usually not
used simultaneously by the same person; hence, it is possible to have an approximate
assessment based on the fnancial protection provided by the program for specifc
services.
The average fnancial protection, the share covered by PhilHealth out of the total
health care cost, shows that 88% of the hospital bill is covered by the program
in public facilities, while 53% of the bill is covered in private hospitals. And yet,
such fgures do not include payments made outside of the hospital. Estimating such
spending in a study which sampled 937 hospitalized children under the age of six,
their average fnancial protection was limited to 53% (Bodart and Jowett, 2005).
In fact, the structure of the benefts covered by NHIP in a minimum or basic package
imposes limits to the suffciency of such benefts. This means it is only suffcient for
restricted types of care and treatments and, in many cases, limited to services in
government hospitals, which can be a basis for rethinking the real fnancial protection
that is being provided to its members and their respective dependents.
The limited coverage of the benefts explains the growing share of out-of-pocket
expenses in total health spending, which makes the health system regressive. In
addition, the high out-of-pocket spending also explains why the use of NHIP services
is low for SP members - an important barrier to accessing health care, especially for
the very poor that require hospital services.
G. Social and Regional Solidarity
The combination of low public spending on health and the high share of private
spending is most indicative of a system that is far from meeting its objective of
developing a universal insurance coverage for all Filipinos. The high private spending
means that the poorest households will depend on the expansion and effective range
9 EXECUTIVE SUMMARY
of subsidized coverage programs and, in turn, the lower middle-income households
will have serious diffculties in achieving universal coverage.
The health coverage is inadequate and uneven, worsening inequalities that
characterize developing countries. Here, universal coverage means something much
more ambitious than the title of universal access or achieving some coverage for
every citizen. It means ensuring uniform and suffcient levels of coverage for all
citizens, funded with tax revenue.
It is possible to distinguish three types of fragmentation in the fnancing of health
systems that affect equity in access to services. First, the problems associated with
high levels of out-of-pocket spending on health should be considered. Second, the
fragmentation that comes from the differences that separate those with formal social
security coverage from those who work in informal sectors of the economy should
also be refected upon. Finally, the territorial fragmentation that derives from the
existence of health systems at the subnational level with different levels of coverage
on the basis of the socio-economic conditions of each locality is also a factor. Thus,
the inhabitants of the same country have different levels of coverage of the public
sector due to its geographical location.
The poor are the most vulnerable as they are less able to recover from the fnancial
consequences of out-of-pocket payments and loss of incomes associated with ill
health. In order to cope with illness-related expenditures, they often have to cut
down expenditures on necessities like food and clothing or take their children out of
school as they cannot afford to pay the school fees anymore. In other words, overall
fnancing for health is regressive in the Philippines. A major portion of the limited
benefts offered by the public sector is received by the less needy. Meanwhile, direct
payments are high and worsen the inequity of the system.
Additionally, it is inevitable to refer to territorial disparities within the Philippines
when evaluating equity in access to health services. As a frst approach to the problem,
it is enough to say that this is a country where regions with poverty incidence at
barely 4% of the population (NCR) live together with others like ARMM, Caraga and
Region V where the indicator is located above the 45%. Despite the overall signifcant
unequal distribution, health spending is not distributed in a compensatory fashion.
In the Philippines there has been, over the last two decades, a deep and unfnished
discussion on the benefts and diffculties of health decentralization. The challenge
is to achieve a weighted position that takes into account the particular conditions of
each case and search for solutions to improve the provision of goods and services by
the State so that the most signifcant changes for the citizens well-being are achieved.
To this end, it is essential to consider the degree of regional productive disparity
within the country as this imposes serious limits to the working and fnancing of
decentralized services, particularly when its provision affects equity as in the case of
health.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
In countries with internal development differences of the magnitude that occur in
the Philippines, the most complex problems facing decentralized systems of public
provision of social expenditure are related to the lack of resources, poor management,
and ineffcient allocation of expenditure in the less developed regions. In such cases,
it is necessary to reinforce the role of the Central Government and search for new
ways of transferring resources to compensate for the differences between regions. In
this sense, it is important to incorporate incentives for expenditure allocation in the
direction required to improve the provision of services to the needy. An alternative
in this sense refers to the incorporation of performance-based grants as positive
incentive to local effort to improve governance and local revenue mobilization, as well
as matching grants to equalize fscal capacities of local governments. While these
are mechanisms gradually incorporated in order to improve resource allocation and
equity in decentralized systems, it should not be ignored that problems may develop
with the eventual loss of resources in jurisdictions that are less effcient in their
use.
A classifcation of restrictions to the use of health services are as follows:
Supply-side barriers:
Limited and uneven number of accredited facilities 1.
Unaffordable health facilities; constraints on distance and related transportation 2.
costs
Inadequate supply of medicines in RHUs 3.
Lack or ineffective social marketing strategy 4.
Demand-side barriers
Lack of fnancial resources (i.e., to purchase medicines, pay for additional 1.
provider fees)
Lack of information on benefts, availment process 2.
Lack of resources to visit health facilities (i.e., transportation costs due to 3.
distance)
Perception of poor quality of healthcare services 4.
As a result of these barriers, the gap between the high percentage of the population
covered by PhilHealth and low percentage of its spending in the total is extremely
high. This signifes the necessary reforms to reach effective universal health coverage
for the whole population. Indeed, the fact of having a credential does not necessarily
mean access to services. As a result of these problems, a research team from the
University of the Philippines School of Economics, led by Orville Solon, developed
the concept of Beneft Delivery Ratio (BDR). It aims to refect the weaknesses of the
health delivery chain in each of the regions of Philippines. The estimations of this rate
for a group of regions highlight the low effective coverage and confrm the signifcant
inequality among regions in the Philippines.
11 EXECUTIVE SUMMARY
H. Financial/Actuarial Sustainability
The Philippines health system is funded from a mix of sources including: a) payroll
contributions from both employees and employers in the formal sector of the
economy; b) payment of premiums from the self-employed, informal workers and
OFWs; c) general fscal revenues that fnance health insurance for the poor (sponsored
program); and d) public programs. At the LGU level, fnancing is fragmented across
provinces, municipalities and cities, with each LGU fnancing its own facilities. LGUs
receive: a) part of the taxes from the national government; b) the internal revenue
allotment (IRA); and c) other revenues of the LGUs allocated to the sector such as
PhilHealth capitation and reimbursements and grants from external sources.
The confuence of various sources reveals a signifcant fragmentation in the fnancing
of the health system. In addition, benefciaries confront out-of-pocket payments for
fees, copayments and drugs, whereas highest-income households pay voluntary
premiums to access private health coverage from HMOs.
Payment mechanisms differ on the basis of the services provided. The outpatient
package services provided by RHUs are usually free of charge. In the case of the
special benefts packages, health care providers are paid per case, set by PhilHealth.
In turn, inpatient care incorporates a fee-for-service (FFS) regime, in which public
and private hospitals have the possibility to charge over the fees (balanced billing).
In the case of human resources, payments are associated with the facilities in
which they work. Doctors from the private sector receive fee-for-service or payments
pursuant to contracts with HMOs. In the public sector, the staff receives monthly
salaries according to the Salary Standardization Law and additional reimbursements
from PhilHealth.
Since 2011, PhilHealth established fxed rates to a number of special packages of
benefts for medical and surgical procedures, eliminating the discretionary collections
and making information transparent to patients. There have been case rates of No
Balance Billing (NBB) for sponsored members since 2010, which permit them to
gain access to health treatments and services in public hospitals with no additional
cost.
PhilHealth pools funds from all sectors of society: formally employed, direct payments
from LGUs, national government budget, and voluntary premiums. All collected
resources are managed as a single fund, with uniform benefts for the members and
dependents of the various components of the program. This results in a series of
cross-subsidies. While on the aggregate, in 2011, beneft payments represented a
ratio of 1.05 of total premium collections, the public and private employed programs
show a benefts-to-premium ratio below 1 (0.75 and 0.61, respectively). Meanwhile,
in the SP and IPP programs, the benefts paid far exceed the premium (3.11 and 2.83
respectively). Obviously, the same occurs in lifetime members, who are not charged
with premiums.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
As opposed to the PhilHealth risk pool, private health insurance only has limited risk-
pooling capacities because of smaller groups. Additionally, HMOs have incentives
to adversely select its members, giving priority to healthier people into the pool,
therefore leading to the cream skimming effect.
The National Health Insurance Program (NHIP) is entirely administered by PhilHealth,
which collects premiums, accredits providers, determines benefts packages and
provider payment mechanisms, processes claims, and reimburses providers and
benefciaries. Thus, PhilHealth takes over responsibilities of supervision, follow-up
and monitoring of the NHIP.
Salaries and other operating expenses are fnanced from premium collection and
revenues from the funds investment returns. As set forth by law, PhilHealth can use
up to 12% of the previous years premium and 3% of the fund revenue for operating
expenses. The share of administrative expenditures in PhilHealths total expenditures
averaged around 11.89% in 2000-2010.
Memberships projections show progress in coverage, considering a growth of 1.18%
per year from 2012 until 2021, in comparison with the total population growth at a
rate higher than 1.7%. With a size of 3.19 members per household, the total coverage
of the program would be around 88.11% in 2021.
In this context, in alternative scenarios, the actuarial report notes continuous
fnancial unsustainability of the fund (NHIP, 2012). Changing the structure of taxes
and increasing wages subject to contribution ceilings, among other assumptions, the
projected scenarios show insuffcient revenues to meet the expenses of the program.
In all cases, the fund is projected to survive until 2016, at the latest.
The various actuarial scenarios projected for the NHIP demonstrate that the program
is not fnancially sustainable in the long run unless reforms are rapidly implemented.
Among the problems to be faced are the following:
The increasing trend in payments to non-paying members and the resulting
increase in the beneft/payments ratio (Jowett and Hsia, 2005);
The irregularity of premium payments by the IPP (Jowett and Hsia, 2005);
The incorporation of additional benefts (such as case rates) and new SP
benefciaries without any corresponding additional revenues;
No change in the contribution rate, which is around 3%;
The growth of fraudulent payments (between 10-20% of beneft claims); and
The deterioration of the fnancial statement and fund reserves in recent years.
Based on the NHIP actuarial study, there are serious concerns on the long-term
fnancial sustainability of PhilHealth under scenarios that do not involve drastic
reforms in the scope of programs and funding. Therefore, it is imperative to boost
collection effciency, compliance rate, and the number of months paid in order to
13 EXECUTIVE SUMMARY
boost revenues and impose mandatory coverage in the informal sector, overseeing
the persistence and continuity of premiums payment by its members.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
INTRODUCTION
The Philippines is a lower-middle income country consisting of an archipelago of
7,107 islands that occupy a territory of 343,282 square kilometers located in the
Southeast Asian Region. Luzon, in the north, is the largest island, where the capital
city of Manila is located. To the south of Luzon are the Visayan Islands whose major
city is Cebu. Further south is the second largest island, Mindanao, where Davao City
is the main urban center (see Figure 1).
Figure 1: Map of the Philippines
15
INTRODUCTION
The countrys total population is estimated at 96 million, distributed in a territory
composed of autonomous regions, provinces and independent cities, municipalities
and component cities and barangays
1
. For administrative purposes, the provinces and
cities are grouped into 17 administrative regions, with uneven economic development
and the populations life conditions. As can be seen in Appendix Table 1, average
income in the National Capital Region (NCR), the region with the highest Human
Development Index, is three times more than that of the Autonomous Region in
Muslim Mindanao (ARMM), which has the lowest Human Development Index. Each
territorial level is governed by corresponding Local Government Units (LGUs).
It is important to remark two special traits that defne an important part of everyday
life in this archipelago which, as will be explained further on, infuence, directly or
indirectly, the health system.
Firstly, the Philippines has a tropical climate. Because of its location in the typhoon
belt of the Western Pacifc, the Philippines experiences an average of twenty typhoons
each year during its rainy season. In addition, the country is along the Pacifc Ring
of Fire where large numbers of earthquakes and volcanic eruptions occur. These
factors combine to make the country one of the most disaster-prone areas of the
globe.
Secondly, the Philippine social life is strongly infuenced by religions (Claudio, 2012-I).
Indeed, the Philippines is one of only two countries (along with Vatican City) where
divorce is not incorporated in state legislation just as in decisions related to health
practices of its population. Additionally, Islam, although professed by only 5% of the
population, has enormous infuence on the southern islands and had been a major
reason in the creation of the ARMM in 1989.
The Philippines health system presents an organization in constant movement, which
cannot be considered in any other way but in transition (WHO, 2011). Its present
organization should be explained and evaluated on the basis of the expectations
and possibilities of its future evolution. In this sense, the main characteristic that
defnes the reforms of the last years is the decision of focusing it on universal health
coverage.
In this context, this paper aims to study, present a situational analysis and make
recommendations on reform of the health system in the Philippines, with attention
paid to the different programs that cover different population groups. After a
presentation of the necessary epidemiological characteristics and the history of the
health system, the study will describe the institutional characteristics, population
coverage, expenditures, health services and benefts, social and territorial solidarity
and gender equity, and fnancial sustainability of the Philippine health care system.
In relation to each of these aspects, the study will present in the fnal chapter, a set of
public policy recommendations that should constitute a path of reforms in the sector
aimed at improving the health coverage of the Filipinos, the systems equity and the
adequacy of benefts provided.
1 The Barangay is the basic unit of government in the Philippines. As the lowest level of political and governmental subdivision in the Philippines, every
Barangay is under the administrative supervision of cities and municipalities. Every Barangay manages its own budget and collects its own taxes.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
The study took place in 2012 in six stages. First, there is a thorough analysis of the
existing information and studies. Second, there is an elaboration of an initial draft
that allowed organizing, at the following stage, of the numerous interviews done
during October with offcials, experts and other personalities that provided essential
information for the study to be done. Having these new input, in the course of the
fourth stage, a preliminary version was written, which was discussed in the ffth
stage of the job and resulted, at the sixth stage, in the writing of this version of the
study. Consequently, this study has been beneftted from the excellent quality of the
studies reviewed and the people interviewed.
17
CHAPTER 1: EPIDEMIOLOGICAL PROFILE
OF THE PHILIPPINES
There have been improvements in the health sector of the Philippines in recent years
but these improvements still pale in comparison to other countries in the Southeast
Asian region. The analysis of its demographic and health aspects shows that the country
is going through a demographic and an epidemiological transition, characterized
by a decrease in fertility, higher life expectancy and a substantial change in the
risk factors. Nowadays, the rapid urbanization, high population density, and factors
related to climate change have begun to infuence the emergence and reemergence of
new infectious diseases.
1a. Population Structure and Demographic Trends
The total population of the Philippines in 1980 was near 48 million, which increased
to 76 million in 2000 and is approximately 92 million in 2010 and 96 million in 2011.
The age structure is a classical broad base indicating a high proportion of children,
a rapid rate of population growth, and a low proportion of older people (DOH, 2005)
(see Figure 2).
80 +
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
Under 1
female
male
Figure 2: Population Pyramid by Sex and Age in the Philippines, 2000
Source: National Statistics Offce (2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
According to the Demographic and Health Survey (DHS) data (Gwatkin et al., 2000),
the population growth is higher among the poor, which seems to be linked to low-
income groups with a limited access to modern contraceptives. The Philippines
fertility rates and contraceptive use appear to be strongly dependent on womens
socio-economic background, which raises concerns about equity in utilization and
fnancing of services and products (Schneider and Racelis, 2004)
2
.
Nevertheless, the population is still far from being regarded as aging. On the
contrary, since 1980, annual population growth has remained at around 2.35 %,
much higher than the average growth rate in Southeast Asia (1.5 %). Similarly, the
Philippines crude birth rate of 27 per 1,000 in 2001 is one of the highest, next only
to Cambodias and Laoss. The Philippine population is still predominantly young,
with the age group 14 years old or younger constituting 40 % of the total population.
In fact, womens fertility rate, the average number of births that a woman has at
the end of her reproductive life, is among one of the highest in the region at 3.03
children per woman, only behind Laos (3.42). However, it should be noted that this
has considerably decreased already in the past 40 years from a level of 6 in 1973
(Gwatkin et al., 2000; Schneider and Racelis, 2004).
2 At the writing of this report, a controversial Reproductive Health Law is being debated. Under the law, free contraceptives and information on family
planning will be available through government health centers, and comprehensive reproductive health classes will be given in schools.
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
1980 1985 1990 1995 2000 2005 2010
High income Low income Middle income Philippines
Figure 3: Projected Life Expectancy at Birth,
Philippines and Selected Group of Countries, 1980-2010
Source: World Bank (2012)
19 CHAPTER 1: EPIDEMIOLOGICAL PROFILE OF THE PHILIPPINES
The average life expectancy at birth in the Philippines rose from 61 years in 1980 to
65 in 1990, 69 in 2000, 70 in 2005 and 71 in 2010. Life expectancy of females has
always been higher than in males (72.8 and 67.5 years, respectively, in 2010). Such
ranges are similar to those of some countries with the United Nations Development
Programmes (UNDP) average Human Development Index (HDI), and also similar to
other countries in the region such as Malaysia (72), Thailand (70) and Vietnam (72).
Some neighboring countries are below these levels: Laos (61), Cambodia (61) and
Myanmar (56), whereas others are above: Brunei (76) and Singapore (81) (UNDP,
2012; WHO, 2012).
The analyses of the evolution of life expectancy over the past 30 years show that the
Philippines remained at a level close to that of middle-income countries. Looking at the
evolution of the trend, it is important to note that the growth of life expectancy in the
Philippines was lower than that in middle-income countries as a whole. Thus, while
in 1980 it was above the average for this group of countries, today life expectancy is
below the average for middle-income group (see Figure 3).
Looking at the distribution of life expectancy at birth by region and sex, it is possible
to see a signifcant spread between them (see Figure 4). Comparing percentages by
gender, women have a higher life expectancy than men in all regions. If one considers
the difference in the absolute values between regions of highest and lowest life
expectancy, the gap reaches fve and seven years for men and women, respectively.
These signifcant differences show the disparity that currently exists within the
geographic regions of the Philippines and the need to prioritize some districts in
particular when planning interventions and delivering services.
55 60 65 70 75
XIII Caraga
XII Central Mindanao
XI Southern Mindanao
X Northern Mindanao
IX Western Mindanao
VIII Eastern Visayas
VII Central Visayas
VI Western Visayas
V Bicol
IV b Mimaropa
IV a Calabarzon
III Central Luzon
II Cagayan Valley
I Ilocos
Cordillera Administrative Region
Metro Manila (NCR)
Philippines
Life expectancy
R
e
g
i
o
n
Male
Female
Figure 4: Life Expectancy at Birth by Sex and Region, 2005
Source: National Statistics Offce (2011), 2000 Census-based Population Projection
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Finally, the evolution of demographic indicators should be focused on the need to
design public policies that forecast future changes in the demands for intervention.
As in other countries, the increase in years in the lives of the Filipinos may be
attributed to their improving health status and other socioeconomic factors (DOH,
2005). In the future, more people will reach old age, thus, changing the current
population pyramid where those over seventy years old represent a low proportion of
the population. With this trend comes an increase in the occurrence of degenerative
diseases and disabilities associated with an aging population, therefore causing an
increase in health care costs.
1b. Basic Indicators: Infant and Maternal Mortality and Malnutrition
Prevalence
The Philippines recorded notable gains in 1990-2006 in reducing both the infant
mortality rate (IMR) and child (age under fve) mortality rate; nevertheless, the
performance in reducing the maternal and fetal deaths is not as commendable.
During this period the infant mortality was reduced to half: from 57 infant deaths
per 1,000 live births in 1990 to 25 in 2008, while the child mortality rate went down
from 80 to 34 per 1,000 children. In both cases, the rate of progress needed to reach
the Millennium Development Goals (MDG) 2015 target is less than the actual rate
of progress to date, hence, it is likely that the MDG targets for child health will be
achieved (United Nations, 2012). Nowadays, the three most common causes of infant
deaths are pneumonia, bacterial sepsis, and disorders related to short gestation and
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1
9
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6
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7
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Deaths under 1 year
Maternal Deaths
Fetal Deaths
Figure 5: Deaths under One Year, Maternal Deaths and Fetal Deaths, 1976 to 2008
Source: National Statistics Offce (2011)
21 CHAPTER 1: EPIDEMIOLOGICAL PROFILE OF THE PHILIPPINES
low birth weight, while the most common causes of child mortality are pneumonia,
accidents, and diarrhea (DOH, 2008).
0
20
40
60
80
100
120
140
160
1
9
6
8
1
9
7
0
1
9
7
2
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8
2
0
1
0
China Indonesia
Korea, Rep. Malaysia
Philippines Sri Lanka
Thailand High income
Low income Middle income
Figure 6: Infant Mortality Rate (per 1,000 live births),
by Country and Group of Countries, 1968-2011
Source: The World Bank (2012)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1
9
7
6
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2
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2
0
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2
0
0
5

2
0
0
6

2
0
0
7

2
0
0
8

Deaths under 1 year
Maternal Deaths
Fetal Deaths
Figure 7: Malnutrition Prevalence, Weight for Age (% of children under 5) in
the Philippines and Selected Group of Countries, 1975-20112008
Source: The World Bank (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Within Asian countries, the Philippines appears to be halfway in achieving the MDG
target. It has higher IMR than Malaysia and Thailand, but lower than Indonesias
rate (DOH, 2005) (see Figure 6). The importance and complexity of these problems is
uneven among countries based on the indicators shown and by taking into account
the different health conditions among countries. In 2003, there are Philippine
regions with IMR above 45 (e.g. MIMAROPA, ARMM) while others rank well below
the national average of 30 (e.g. CAR with 20). The same regional disparity can be
observed regarding maternal death (see Appendix Table 1).
By analyzing the evolution of the prevalence of malnutrition in children under 5 years
in the Philippines compared to groups of high, middle and low-income countries, it
is possible to observe a similar trend to that of life expectancy. The Philippines rates
are similar to the mean of middle-income countries but the improvement over time is
less for the Philippines than for this group as a whole (see Figure 7). The World Bank
defnes a Prevalence of child malnutrition as the percentage of children under age 5
whose weight for age is more than two standard deviations below the median for the
international reference population ages 0-59 months (The World Bank, 2012).
1c. Causes of Morbidity and Mortality
The analysis of the causes of morbidity in the Philippines is related to development
problems. As in the past, most among the ten leading causes of morbidity are
communicable diseases. The leading causes of morbidity from infectious diseases in
1996-2006 were: acute lower respiratory tract infection and pneumonia, bronchitis/
bronchiolitis, acute watery diarrhea, infuenza, pulmonary tuberculosis, acute febrile
illness, malaria, chicken pox, measles, and dengue fever. Such rates have declined
over the last couple of years. Malaria is still the most common and persistent mosquito-
borne infection in the country and drug resistant cases are on the rise. Two of the top
ten leading causes of morbidity are non-communicable diseases: hypertension and
cardiovascular diseases (DOH, 2008) (see Table 1).
Source: National Statistics Offce (2011) based on Field Health Service
Information System, Department of Health
Table 1: Ten Leading Causes of Morbidity,
Number and Rates, 2008 (rate per 100,000 inhabitants)
Disease
Morbidity
Number Rate
1. Acute respiratory infection 1,647,178 1,840.6
2. ALTRI and pneumonia 78,199 871.8
3. Bronchitis/Bronchiolitis 519,821 580.8
4. Hypertension 499,184 557.8
5. Acute watery diarrhea 434,445 485.4
6. Infuenza 362,304 404.8
7. TB respiratory 96,497 107.8
8. Acute Febrile Illness 35,381 39.5
9. Disease of the Heart 32,541 36.4
10. Chickenpox 25,677 28.7
23 CHAPTER 1: EPIDEMIOLOGICAL PROFILE OF THE PHILIPPINES
Other infectious diseases such as rabies, flariasis, schistosomiasis, leprosy, and
human immunodefciency virus/acquired immune defciency syndrome (HIV/AIDS)
remain important public health problems even though they are not leading causes
of illness and death. Nevertheless, it is important to point out that rabies incidence
in the Philippines is the sixth highest in the world; flariasis is the second leading
cause of permanent disability among infectious diseases; schistosomiasis remains
endemic in the country although it has been eliminated in most Southeast Asian
countries; and, while leprosy seems to be eliminated at the national prevalence level,
certain areas still have it. Dengue fever has sudden increase in outbreaks. HIV/AIDS
prevalence is estimated to be low in the Philippines but high-risk behaviors appear
to be increasing and could lead to high incidence over time (DOH, 2008).
Unlike the leading causes of morbidity as seen above, non-communicable diseases
are responsible for the current rate of mortality or for the majority of deaths in the
country; thus, heart diseases and malignant neoplasm comprise more than a third
of the total causes of death (see Table 2). Deaths due to accidents doubled from
21.5 per 100,000 of the population in 1994 to 41.3 in 2004 (NSO, 2011). Deaths
caused by communicable diseases have been reduced by more than half in the last
twenty years. This is quite evident in the decrease in number of deaths caused by
pneumonia from 86.4 per 100,000 of the population in 1984 to 38.4 in 2004. Deaths
from all types of tuberculosis have also decreased by 40 percent in the last two
decades. This is the result of more aggressive disease prevention and control efforts
by the government and improvements in curative care (DOH, 2008).
To sum up, although progress has been made in the past decades to control
communicable diseases as leading causes of deaths, their burden as a cause of
morbidity is still high. On the other hand, non-communicable and chronic diseases
have emerged as major causes of death.
Source: Philippine Health Statistics (2011)
Table 2: Ten Leading Causes of Mortality,
Number and Rates, by Sex, 2006
Diseases Total
Number
Total Rate
Male Female
1. Diseases of the heart 83,081 47,259 35,822 95.5
2. Diseases of the vascular system 55,466 30,869 24,597 63.8
3. Malignant neoplasm 43,043 22,472 20,571 49.5
4. Pneumonia 34,958 17,166 17,792 40.2
5. Accidents 36,162 29,160 7,002 41.6
6. Tuberculosis, all forms 25,860 17,862 7,998 29.7
7. Chronic lower respiratory
diseases
21,216 14,715 6,501 24.4
8. Diabetes mellitus 20,239 9,818 10,421 23.3
9. Certain conditions originating in
the perinatal period
12,334 7,425 4,909 14.2
10. Nephritis, nephrotic syndrome
and nephrosis
11,981 7,107 4,874 13.8
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
1d. Natural and Man-made Disasters
Due to its geographical location, the Philippines has always been subjected to
natural hazards such us typhoons, tornadoes, earthquakes, tsunamis, and volcanic
eruptions, among others. These factors, when put together, turn the country into
one of the most exposed to natural disasters in the world. This leaves the country
vulnerable to the emergence and the reemergence of diseases related to natural
disasters and climate change, which should be addressed by the countrys health
care system (Nyunt-U, 2012-I).
Natural disasters and human induced incidents contribute signifcantly to the
disease and injury burden of Philippines. In 2010, 556 occurrences of natural and
man-made disasters were reported, which affected 6,386,781 persons. Near 109,133
houses were fully damaged and 186,313 were partially damaged (see Table 3). It is
extremely interesting to note that while the economic damage was caused, almost
entirely, by destructive typhoons and the effects of El Nio, the highest number of
deaths was due to vehicular accidents. The appendix shows a breakdown of each of
the categories included in this table.
According to a study by the Asian Development Bank (ADB), the country is still lacking
in a comprehensive program to assist people affected by disasters. The scope of
humanitarian aid is insuffcient and disaster response efforts are often uncoordinated.
Only half of the Filipinos affected by typhoons and other hydrometerological
phenomena in rural areas are assisted by the government and private institutions
providing humanitarian aid. In the urban setting, there are signifcant restrictions
in providing health services during food and other disasters (Claudio, 2012-I). The
victims of these disasters tend to be the poor who live in environmentally hazardous
areas and often in makeshift housing. Agriculture, the sector on which two-thirds of
the income of the poor depends, is the most vulnerable to the vagaries of the weather
and the incidence of pests and diseases. In conclusion, this is an important concern
as disasters cause serious damages and losses to property, especially of the poor,
and destroy their only means of living. If they do not receive assistance, the risk of
falling in a perpetual poverty trap is high (ADB, 2007).
Table 3: Damages Caused by Major Natural Disasters and by Man-made Disasters, 2010
Disasters Occurrence Casualties Affected
Houses
Damaged
Cost of
Damages

Dead Injured Missing Families Persons Total Partial
(in Million
Pesos)
Total 556 766 2 148 1,315,069 6,386,781 109 186 25
A. Natural
Incidents
234 59 57 5 737 3,600,799 484 2 13
B. Typhoons 11 136 133 85 543 2,596,587 103 184 12
C. Human-
induced
Incidents
311 571 1 58 35 189 5 465 205
Source: National Statistics Offce (2011) based on the National Disaster Risk Reduction and Management Council
25
CHAPTER 2: CURRENT ORGANIZATION
OF THE HEALTH CARE SYSTEM
2a. Brief Description of the Historical Evolution of the Health Care System
As in many other countries, the history of the Philippines health care system dates
back to the turn of the twentieth century. During the American colonization, the
health industry began taking shape after the establishment of the University of
the Philippines - College of Medicine and Surgery and the subsequent fourishing
of medical associations. Before then, health service providers consisted mostly of
traditional healers or hospitals run by religious orders. With American-induced
bureaucratization of the state, regulations on health service provision were put
in place, with the establishments of some public agencies and the passage of the
frst health-related laws and policies. In 1907, the Philippine General Hospital was
opened.
However, during the Japanese occupation, developments in the health sector
were disrupted and thus the health sector deteriorated. Professional training was
interrupted and the various health services were discontinued. Only with the arrival
of the Independent Third Republic did public policies and regulations of the sector
went back to their original path. In 1947, the Department of Health was created.
By 1954, there was a partial decentralization of the sector based on the creation of
the Rural Health Units. Table 4 summarizes the main features of the health system
during the different stages of its development.
As the sectors historical summary shows, the health systems evolution has been
determined by a sequence of rules governing the performance and programs provided
by the state. In many cases, such rules preceded the guarantee of the right to health
care as stated in the 1987 Constitution. Section 15 of Article II states that: The
state shall protect and promote the right to health of the people and instill health
consciousness among them.
In 1969, the Republic Act (RA) 6111, otherwise known as the Philippine Medical Care
Act, was passed. It established the Philippine Medical Care Plan and the Philippine
Medical Care Commission (PMCC). However, it was only in 1971 when the latter was
organized with the appointment of a nine-member Board of Commissioners (ASEAN
Social Security Association, 2012).
The PMCC was given the task of administering the Philippine Medical Care Plan,
commonly known as Medicare. This program implemented a policy to provide total
medical services to the people based on the following concepts of health care:
comprehensive, in accordance with the patients individual needs, coordinated
through the use of government and private medical facilities, and common pooling of
contributions into the Medicare Health Insurance Fund (HIF).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Table 4: Brief Historical Overview of the Philippine Health Care System
Pre-
colonial
Spanish American Japanese Early Republic Martial Law
Decentrali-
zation
Health
fnancing
Fee-for
service
Religious
hospitals
fnanced by
donations
Largely fee-for
service
Services given
for free
Health services
in government
facilities pro-
vided free for all
Medical Care
Act of 1969
implemented
Philhealth cre-
ated (1995)
Health
human
resources
Each village
had its own
healer
Native
healers, para-
professionals
and religious
order
UP College of
Medicine and
Surgeryestablished;
medical asso-
ciations began to
fourish; several
medical doctors
got trainings
abroad
Health profes-
sional training
disrupted
Different laws
regulated the
practice; medical
doctors con-
tinued to train
in the US with
some choosing
to migrate
Migration
of medical
doctors to US
increased
Continued
migration of
health workers,
now including
nurses and
other profes-
sionals
Information
systems
Oral
traditions
committed
to memory
and passed
on through
apprentice-
ship
Pen and
paper; data
not standard-
ized and
unreliable
Data kept per
hospital/ facility;
centraliza-tion still
a problem
Many health
records and
facilities
destroyed
Established as
the Disease
Intelligence
Center in 1960
Integrated
health
information
system at-
tempted but
not continued
FHSIS devel-
oped in 1990;
National Tele-
health Center
of UP-NIH
established
Governance
and Regula-
tion
Healers had
concurrent
functions
as village
elders or
priests
Largely by
religious
orders
Military Board of
Health to care
for the injured
American soldiers
(1898); estab-
lishment of the
Civilian Bureau of
Health and Bureau
of Govern-mental
Laboratories
(1902); health
system centralized;
policies such as
Food & Drugs Act
enacted (1914)
National
Government
dissolved;
health service
was relegated
to the Depart-
ment of Edu-
cation, Health
and Public
Welfare
DOH, Bureau
of Hspitals,
and Bureau
of Quarantine
created (1947);
Institute of
Nutrition estab-
lished (1948);
Food & Drug
Administra-tion
established
(1953); Partial
decentralization
of DOH (1958)
Focus on
Health
Maintenance;
Specialty Hos-
pitals built
Generics Act
passed (1988);
health care de-
volved through
the LBU Code
(1992).; Health
Sector Reform
started (1999)
Service
delivery
Done by
healers;
very local in
scope
Hospital ran
by religious
orders
catered to
the elite,
soldiers and
the indios;
private prac-
tice began in
the late 19th
century
Philippine
General Hospi-
tal established
(1907);Community
Health and Social
Centers estab-
lished (1933)
Many services
not continued
RHU Act
institutiona-lized
the Rural Health
Units (1954)
Nutrition and
child health
emphasized
with the
establish-
ment of NNC
(1974) and
EPI (1976);
primary health
care started
(1979); inte-
grated health
care delivery
system man-
dated (1982)
Inter-local
health zones
started (1999);
TB DOTS
implemented
(2002).
Source: Own elaboration based on Acuin et. al. (2010)
27 CHAPTER 2: CURRENT ORGANIZATION OF THE HEALTH CARE SYSTEM
Medicare aimed to provide health care to Filipino citizens in an evolutionary way
within the economic capacity of the country, and as a viable means of helping the
people pay for their own adequate care. It consisted of two programs or phases,
namely:
The Medicare Program I (MPI) is designed for the formal sector of the labor force 1.
(regularly employed and salaried), basically private sector employees who are
members of the Social Security System (SSS), and civil servant-members of the
Government Service Insurance System (GSIS).
The Medicare Program II (MPII) is designed for the informal sector of the labor 2.
force, mainly the self-employed who are not members of either SSS or GSIS.
Program I was implemented ahead of Program II. It offcially started in January 1972
when members of GSIS and SSS began to make contributions to the health insurance
funds of their respective systems through mandatory salary deductions. These two
agencies date back to the 1950s and provide different social security services, including
health services, to their members (Mesa-Lago et al, 2012). These agencies collected
the contributions, administered and collected funds including their investment, and
took charge of processing, adjudicating and paying the hospitals, physicians, and the
payment claims for medical care services that are rendered to the members.
Program II started as a pilot test in 1983 in Bauan, Batangas, Unisan and Quezon.
Later, membership was expanded to include retirees and pensioners and overseas
contract workers as well as their legal dependents. It was operated and managed by
the LGUs and the benefts varied from one community to another.
In the course of time, and with the purpose of providing better service quality, the
MPI coverage began to expand through several decrees and executive orders.
Other important regulations that should be noted for a comprehensive analysis of
the health sector and its performance include the integration of public health and
hospital services in 1983 (EO 851) and, subsequently, the devolution of health services
from central government to LGU as mandated by the Local Government Code of 1991
(RA 7160). The latter constitutes a key factor in understanding the performance of
health service provision in a country with great population dispersion (i.e., while
NCR has more than 11 million inhabitants, the Cordillera Administrative Region
(CAR) only has 1.5 million) and little interconnection among local governments due
to geographical barriers. In 1999, the Department of Health (DOH)
3
launched the
Health Sector Reform Agenda (HSRA) as the major policy framework and strategy to
improve the way health care is delivered, regulated and fnanced (DOH, 2005).
Although Medicare ran for almost a quarter of a century, the need for improvements
was recognized mostly due to the need to widen the populations health coverage,
ensure the quality of the services, improve the processing system, redefne the content
of the beneft packages, and rationalize payment schemes, among other issues.
3 DOH is the leading agency in Philippines health policy, as will be explained in section 2.c.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
In 1995, with the passage of the National Health Insurance Act (RA 7875) the
National Health Insurance Program (NHIP) was established. The same law created
the Philippine Health Insurance Corporation (PhilHealth or PHIC) as the agency
responsible for the administration of the NHIP. Unlike the centralized structure of
the Philippine Medical Care Commission, the PhilHealth adopted a decentralized
organization and a community-based setup. Additionally, the new program targeted
universal coverage compared with the select groups of the population that beneftted
from the Philippine Medical Care Commission. The widening of the coverage implied
a gradual process in which different components currently making up the PhilHealth
were applied.
In 1996, the sponsored program (SP) was launched, which aimed at covering the
poorest households. In 1997 PhilHealth assumed the administration and coverage of
civil servants that were previously under the GSIS then, while in 1998, it absorbed
the coverage of the private sector previously under the SSS. Other components of the
program focused on capturing specifc sectors or groups of the population which were
not as easy to classify. Particularly, PhilHealth implemented the Individually-Paying
Program (IPP) in 1999, which focused on the informal sectors of the population.
This program provides coverage to the self-employed, informal workers, employees
of international organizations, and other individuals who cannot be classifed in the
other programs (e.g., unemployed individuals who are not classifed as poor).
In 2002, the government introduced the Non-Paying Program in order to provide
free health care to retirees and pensioners. By 2005, PhilHealth also took over the
responsibility of administering the program for Overseas Filipino Workers (OFWs)
from the Overseas Workers Welfare Administration (OWWA) (WHO, 2011).
Finally, in 2010, The Aquino Health Agenda: Achieving Universal Health Care for
All Filipinos was launched through Administrative Order No. 36. This agenda, also
named Kalusugang Pangkalahatan, provided for three strategic thrusts to achieve
universal health care:
Rapid expansion in NHIP enrollment and beneft delivery targeting national 1.
subsidies on the poorest families;
Improved access to quality hospitals and health care facilities through accelerated 2.
upgrading of public health facilities; and,
Attainment of the health-related MDG through additional effort and resources 3.
in localities with high concentration of families who are unable to receive critical
public health services.
Table 5 summarizes the main historical events since the creation of the PhilHealth and
identifes the different groups of the population that have been covered throughout
time and the widening of the benefts provided by the program.
29 CHAPTER 2: CURRENT ORGANIZATION OF THE HEALTH CARE SYSTEM
2b. Brief Description of Current Social Security Contributory and Non-
Contributory Health Care Schemes
Like any other health care system that intends to improve the populations health
conditions and respond to various changes (demographic, technological, social,
economic, political, etc.) affecting the sector, the Philippines system presents an
organization in constant movement, which cannot be considered in any other way
but in transition (WHO, 2011). Thus, its present organization should be explained
and evaluated on the basis of the expectations and possibilities of its future evolution.
In this sense, the main characteristic that defnes the reforms of recent years is its
focus on universal coverage.
Table 5: Main Historical Facts about PhilHealth, 1995-2010
1995 The National Health Insurance Act of 1995 (Republic Act 7875) creates PhilHealth which is tasked to
administer the NHIP.
1996 The Board approves the frst Implementing Rules and Regulations (IRR) of RA 7875.
PhilHealth begins its LGU networking and formally launches the Indigent Program in Abra and
Camiguin.
1997 PhilHealth assumes Medicare claims processing functions for government sector workers from the
GSIS.
Administrative Order 277 mandates PhilHealth to cover the poorest 25 percent of the population in
a period of fve years.
1998 PhilHealth assumes the Medicare claims processing functions for privately-employed sector from the
SSS.
By late 1998, the Indigent Program expands to include the poor in more affuent provinces and
cities. As a result, enrolment increases to 45,000 families.
1999 PhilHealth increases benefts by an average of 50% for all members.
The DOH launches the HSRA as the major policy framework and strategy to improve the way health
care is delivered, regulated and fnanced.
2000 Start of Auto-Credit System (ACS) in reimbursing health care professionals.
2001 156,039 urban poor households enrol for Plan 500; 613,576 households enrol in the Indigent
Program (inclusive of Plan 500); 929,589 enrol in the Individually Paying Program.
2002 Inpatient hospital ceilings for certain beneft items increased by as much as 43%.
Launching of registration of Retirees and Pensioners to the Non-Paying Program
2003 Introduction of the Dialysis Package and Outpatient Anti-tuberculosis/DOTS Benefts Package.
PhilHealth Board approved the PhilHealth Medium-Term Plan (2004-2012).
2004 The Plan 5/25 Program is launched which, along with the Plan 500, brings in more than six million
families or over 30 million individuals under the Sponsored Program and enables PhilHealth to now
boast coverage of three-fourths of the population.
2005 PhilHealth assumes the administration of the OFW health coverage.
2010 The Aquino Health Agenda: Achieving Universal Health Care for All Filipinos (Administrative Order
0036/2010) was enacted.
Source: Own elaboration based on Solon (2003); The PhilHealth Chronicles (2005); DOH (2005); and Manasan
(2009, 2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
While there are important private sector schemes which has flled the spaces
traditionally reserved for prepaid medicines as well as other public sector schemes
which have proved to be ineffcient, we will focus on the description of the public and
social security subsector components, which should be considered as a whole due to
the recent reforms of the sector (HMOs will be discussed at the end of the chapter).
Considering that there is a strong process of decentralization in the sector, most of the
health public programs are managed by the LGUs; however, there are some important
initiatives managed by the central government level such as social assistance and
other poverty-targeted programs (Banzon, 2008; Orbeta, 2011)
4
. In addition, there
are program packages for the prevention, management and control of diseases, as
well as health promotion and protection. These packages cater to the various levels
of health care delivery (from community-based to tertiary level facilities), to various
population groups (mothers and infants, children and adolescents, adults and the
elderly), and to specifc diseases (tuberculosis, malaria, cardiovascular, cancer)
(DOH, 2005). All programs are fnanced by general taxes, hence, these are non-
contributory.
As previously mentioned, the public and social security subsectors should be
approached as a whole, taking into account the reforms initially introduced in the mid-
1990s. Since 1995, the NHIP through
PhilHealth is a government mandatory
health insurance program that seeks
to provide universal health insurance
coverage and ensure affordable,
acceptable, available, accessible, and
quality health care services for all citizens
in Philippines (PhilHealth, 2012).
The NHIP should provide compulsory
universal health insurance coverage as a
mechanism to allow all Filipinos to gain
fnancial access to health services (United
Nations, 2012). The NHIPs provision for
universality and equity applies to the
various classifcations of members of the
resident population and those working
overseas either on a contractual or long-
term basis. Given that the system is far
from achieving its long-term goals, these
will remain to be the target of the present
reform process. This is the reason why it
is convenient to highlight the existence
of this outlook in Box 1.
As explained, different programs have
been successively incorporated in the
NHIP since 1995 to provide health care
4 Chapter 6 evaluates the alternatives and challenges of the health services decentralization process.
Box 1: PhilHealths Purpose of Being
PhilHealths primary purpose of being is to ensure
that all Filipinos, especially those who cannot afford
the cost of health care, are given real fnancial risk
protection. PhilHealths real fnancial risk protection
means that:
1. All Filipinos are enrolled into the NHIP (i.e.,
100% coverage).
2. Members are empowered to enjoy their
enhanced benefts.
3. Each member will be assigned to a primary
care provider who shall address his/her health
needs.
4. Members have access to accredited facilities
that are of superior quality.
5. Every Filipino who desires to avail of the
No Balance Billing (zero co-payment) policy
will always have an opportunity to do so
anywhere in the county. This reduces, if not
totally eliminates, debilitating out-of-pocket
health expenses that drive families deeper
into poverty.
Source: PhilHealth (2012)
31 CHAPTER 2: CURRENT ORGANIZATION OF THE HEALTH CARE SYSTEM
coverage to different population groups. Currently, there are fve membership types
under the NHIP that lead to fve different PhilHealth programs. Each has different
conditions of access, benefts and fnancing. The fve
5
programs are:
Employed Sector Program: 1. compulsory coverage of all employees in government
and from the private sector
Individually Paying Program: 2. voluntary coverage of the self-employed and
others in the informal sector, as well as those previously formally employed and
any other not covered by the rest of the programs
Sponsored Program: 3. covers the extremely poor whose income is insuffcient
for the subsistence of their families; provides access to health care to those in
the lowest 40% income bracket of the population (quintiles 1 and 2)
Overseas Filipino Workers: 4. registered with the Overseas Workers Welfare
Administration (OWWA)
Lifetime Member Program: 5. free for members who already completed their 120
monthly contributions
In addition to the principal members, PhilHealth covers, without additional premium,
the members dependents: the legitimate spouse who is not a member in her/his own
right, children and stepchildren below 21 years of age, and parents or step-parents
aged 60 and older who are not themselves members of PhilHealth. There is no limit
to the number of dependents of each member (United Nations, 2012). As will be
explained in Chapter 3, the benefciaries of the program include the main members
and their dependents.
Lastly, as analyzed in Chapter 4, the private subsector captures the greatest
proportion of resources destined to the Philippine health care, although this does
not necessarily imply that the magnitude of health resources is high. The private
subsector includes: for-proft and non-proft health providers offering health services
in clinics and hospitals that are paid by users; health insurance fnanced by voluntary
premiums; manufacture and distribution of medicines, vaccines, medical supplies,
equipment and health and nutrition products; research and development; human
resource development; and other health-related services (DOH, 2005). Furthermore,
out-of-pocket expenses from households for many contingencies are not covered by
the subsectors of the health system. According to Orbeta, nascent community-based
health care systems are voluntary complementary schemes paid to private non-
proftable organizations (Orbeta, 2011).
2c. Role of the State in Regulation and Supervision of the Entire Health Care
System
The Philippine Health system is ruled by the national government through the DOH
and the public sector includes, additionally, LGUs and other national government
agencies providing health services. The DOH is the leading agency in health. It is
responsible for the general regulation and supervision of the Philippines health care
system, with its most important tasks to manage the sectors national policy and
5 Characteristics and coverage of each of these programs will be described in Chapter 3.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
develop national plans, as well as establish the technical standards and guidelines
on health. The DOH is headed by a cabinet-rank Secretary of Health appointed by
the President of the Republic.
According to the DOH, In the Philippines, the major objective of health regulation
reforms is to assure access to quality and affordable health goods and services,
especially those commonly used by the poor. On the supply side, the strategic
approach is the harmonization of systems and processes for licensing, accreditation
or certifcation of health products, devices, facilities and services to make health
regulation rational, simple and client-responsive (DOH, 2005).
The DOH consists of 17 central offces, 16 centers for health development (CHDs)
located in various regions, 70 retained hospitals, and four affliated agencies. The
general coordination and monitoring of the National Health Objectives and Local
Government Code with the various CHDs is under the Offce of the Secretary of
Health. It includes the Health Emergency Management Staff, the Internal Audit Staff,
the Media Relations Group, the Public Assistance Group, and three Zonal Offces of
the DOH, each located in Luzon, Visayas and Mindanao (World Bank, 2011).
Among the various clusters assigned to the management and regulation of different
aspects of the health system, the following offces must be highlighted: the Sectorial
Management Support Cluster which is responsible for functions such as policy-
making and priority setting, including the generation of the evidence base for health
reforms, the Internal Management Support Cluster, the Health Regulation Cluster
which is composed of the Bureau of Health Facilities and Services, the Food and
Drug Administration and the Bureau of Health Devices and Technology and the
Bureau of Local Health Program Development Cluster.
Additionally, there is a series of attached agencies, among which are the Dangerous
Drugs Board, the Philippine Institute of Traditional and Alternative Health Care,
and the Philippine National AIDS Council. For the purposes of this study, the most
relevant is PhilHealth, which is the agency responsible for implementing the national
health insurance law and administering the NHIP.
On matters of governance, the PhilHealth administers the program at the central
level with a consolidated policy-making and managerial function (Domingo, 2012-I).
Its roles include: policy formulation, program development and administration,
overall fnancial management, research development, determination of standard
settings, development of guidelines on premiums, benefts and referral systems, and
the establishment of PhilHealth Regional Offces (PROs) and Service Offces (SOs).
The PROs and SOs coordinate closely with the LGUs on the implementation of the
program at the local level, which provides a greater degree of decentralization to the
management of the program (ASSA, 2012).
PhilHealth has the status of a tax-exempt government corporation attached to the
DOH. The Secretary of Health heads the PhilHealth Board of Directors. This Board
is composed of 11 members wherein seven are from government agencies and the
remaining four are representatives from civil society (labor, employers, self-employed
33 CHAPTER 2: CURRENT ORGANIZATION OF THE HEALTH CARE SYSTEM
sector and providers). The President of the Philippines appoints the Members of the
Board upon the recommendation of the Chairperson of the Board (Secretary of Health).
The President of PhilHealth is appointed for a non-renewable term of six years upon
the recommendation of the Board. PhilHealth has management autonomy since the
president can set, within certain limits, his/her own salary scales. PhilHealth is
required by its law to establish local health insurance offces in each province or
chartered city (World Bank, 2011).
Since the devolution of health services in 1991, the provision of health services,
particularly primary and secondary levels of health care, became the mandate of
the LGUs. In this sense, health is managed by provincial, municipal and barangay
local government offces. Provincial and district hospitals are the responsibility of
provincial governments while municipal governments are responsible for the rural
health units (RHUs) and Barangay Health Stations (BHSs).
In general, LGUs have minimal institutional infrastructure to manage health. In
addition to the DOH, PhilHealth, and LGU structures, there are existing professional
and civil society groups in the Philippines, i.e. the strong presence of the Philippine
Hospital Association and the Philippine Medical Association to which the Philippine
Family Medicine Association is linked (World Bank, 2011; Patino, 2012-I).
2d. Regulation of Health Maintenance Organizations (HMOs)
Lastly, regarding the private sector, in the Philippines there is a small group of
Health Maintenance Organizations (HMOs) devoted to providing or arranging for the
provision of pre-agreed or designated health care services to its enrolled members
for a fxed prepaid fee for a specifc period of time (Da Silva, 2012-I). There are three
different types of HMOs:
The 1. investor-based HMO which is organized to operate at a proft. In 2011
there were 20 issued clearances to operate in Philippines.
The 2. community-based HMO, a non-proft organization designed for the beneft
of a particular community. In 2011, there were no such community-based
HMOs recorded to have been operating in the Philippines.
The 3. cooperative HMO which flls the requirements of a cooperative (as
prescribed in the Cooperative Code of the Philippines). In 2011, there was only
one Cooperative HMO.
According to A.O. 34 of 1994 (Rules and Regulations on the Supervision of HMO), the
minimum facilities required to any applicant investor-based HMO shall be:
Management of one tertiary hospital or affliation with fve tertiary hospitals 1.
An outpatient clinic with basic diagnostic facilities for ECG, chest and extremity 2.
X-rays, CBC, urinalysis and fecalysis
Forms of all standard contracts to be entered into with prospective members 3.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
A copy of the brochures on the standard procedures for availability of benefts 4.
and fees of PhilHealth/Medicare
A statement describing the differences, if any, in the standard benefts and fees 5.
of PhilHealth against non-members
A copy of the agreement between the applicant HMO and the providers who 6.
shall furnish the pre-agreed or designated health care services to the HMOs
prospective member
A statement of the HMO capitalization duly certifed and attested by the Securities 7.
and Exchange Commission (SEC) or Cooperative Development Agency (CDA), as
the case may be
A listing of the names and locations of the providers and other persons or facilities 8.
either owned or controlled by the applicant HMO or with whom it has contracted
to furnish designated health care services to its prospective members
Additionally, for community-based or cooperative HMO, the minimum facilities
required are:
One affliated general hospital 1.
One affliated outpatient clinic 2.
A copy of the standard beneft packages to be offered to prospective members 3.
Schedule of fees to be charged for the standard packages 4.
According to information given by the Association of Health Maintenance Organizations
of the Philippines (AHMOPI), HMOs covers mostly those in the employed sector.
Payment of premium depends on the agreement among the employee and the
employers. In 2011, there were around 3.3 million of HMO plan holders, mainly
located in Metro Manila. Usually, the payment mechanism is per service, but there
are some cases of capitation (Da Silva, 2012-I)
6
.
6 Unlike PhilHealth, payments made by HMOs are subject to Value-Added Tax (VAT).
35
CHAPTER 3: HEALTH CARE COVERAGE
Over and above the long-term objectives and the measures implemented in the past
few decades, the Philippines health care coverage is still insuffcient in terms of the
quantity of people it has covered, benefts assured to each group, and the quality
of such services. However, the NHIP is the largest insurance program in terms of
coverage and beneft payments. The private insurance and HMO sector has grown
considerably in recent years, but continues to account for a small share of total
health spending, as will be presented in Chapter 4. In the present chapter, the
different aspects of the health coverage shall be evaluated, particularly those which
are provided by PhilHealth.
3a. PhilHealth Coverage
PhilHealth is mandated to provide universal coverage of health services. As shown
in the previous chapter, the Philippiness health care system is made up of different
subsectors and components that provide coverage to various segments of the
population. Details of the target population of those subsectors and components have
been briefy described already and are further elaborated below. Total benefciaries are
members or dependents in the various programs making up PhilHealth (PhilHealth,
2012).
A. MEMBERS
1. Employed Sector Program: compulsory coverage of all employees in government
and in the private sector. These groups were covered by the GSIS and the SSS,
respectively, but PhilHealth took over the roles that these institutions used to
play. They are incorporated into these categories:
i. Government Sector: Employees of the government, whether regular, casual
or contractual, who render service in any government branch, military or
police force, political subdivisions, agencies, or instrumentalities, including
government-owned and controlled corporations, fnancial institutions with
original charters, constitutional commissions, and fll either elective or
appointive positions, regardless of status of appointment.
ii. Private Sector: Those who are employed by the following:
Corporations, partnerships, or single proprietorships, non-government
organizations, cooperatives, non-proft organizations, social, civic,
professional or charitable institutions, organized and based in the
Philippines
Foreign corporations, business organizations, or non-government
organizations based in the Philippines
Foreign governments or international organizations with quasi-state status
based in the Philippines which entered into an agreement with PhilHealth
to cover their Filipino employees
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Foreign business organizations based abroad with agreement with
PhilHealth to cover their Filipino employees
Sea-based OFWs
Household employees
2. Individually Paying Program: Voluntary coverage of:
i. Self-employed individuals: Those who work for themselves and are therefore
both the employer and employee, including but not limited to the following:
Self-earning professionals like doctors and lawyers
Business partners and single proprietors/proprietresses
Actors, actresses, directors, scriptwriters and news reporters who are not
under an employer-employee relationship
Professional athletes, coaches, trainers and jockeys
Farmers and fsher folk
ii. Workers in the informal sector such as ambulant vendors, watch-your-car
boys, hospitality girls, tricycle drivers, etc.
iii. Separated from employment: Those who were previously formally
employed (with employer-employee relationship) and are separated from
employment.
iv. Employees of international organizations and foreign governments based in
the Philippines without agreement with PhilHealth for the coverage of their
Filipino employees in the program.
v. All other individuals not covered under the previous categories mentioned,
including but are not limited to the following:
Parents who are not qualifed as legal dependents, indigents or retirees/
pensioners
Retirees who did not meet the minimum of 120 monthly premium
contributions to qualify as non-paying members
Children who are not qualifed as legal dependents
Unemployed individuals who are not qualifed as indigents
Retired AFP personnel who are not yet 56 years old
Optional retirees who have rendered 20 years in military service
Complete Disability Discharge (CDD) retirees separated from military
service due to physical disability incurred in the line of duty
Qualifed benefciaries of deceased AFP uniformed personnel
3. Sponsored Program: Covers the extremely poor:
Qualifed indigents belonging to the lowest 40% of the Philippine
population
Families listed in the National Household Targeting System for
37 CHAPTER 3: HEALTH CARE COVERAGE
Poverty Reduction (NHTS-PR) of the Department of Social Welfare and
Development
Families identifed as poor by the sponsoring LGUs
4. Overseas Filipino Workers
i. Active land-based Overseas Filipino Workers (OFWs) who underwent the
normal process of registration as an OFW at Philippine Overseas Employment
Administration (POEA) Offces
ii. OFWs who are currently abroad but are not yet registered with PhilHealth
may also register under this category
5. Lifetime Member Program: This program is free for members that have already
completed their 120 monthly contributions including:
Old-age retirees and pensioners of the GSIS, including uniformed and non-
uniformed personnel of the AFP, PNP, BJMP and BFP who have reached
the compulsory age of retirement before June 24, 1997, and retirees under
Presidential Decree 408
GSIS disability pensioners prior to March 4, 1995
SSS pensioners prior to March 4, 1995
SSS permanent total disability pensioners
SSS death/survivorship pensioners
SSS old-age retirees/pensioners
Uniformed members of the AFP, PNP, BFP and BJMP who have reached
the compulsory age of retirement on or after June 24, 1997, being the
enforcement date of R.A. 8291 which excluded them in the compulsory
membership to the GSIS
Retirees and pensioners who are members of the judiciary
Retirees who are members of Constitutional Commissions and other
constitutional offces
Former employees of the government and/or private sectors who have
accumulated/paid at least 120 monthly premium contributions as provided
for by law but separated from employment before reaching the age of 60
years old and thereafter have turned 60 years old
Former employees of the government and/or private sectors who were
separated from employment without completing 120 monthly premium
contributions but continued to pay their premiums as Individually
Paying Members until completion of the required 120 monthly premium
contributions and have reached 60 years old as provided for by law
Individually Paying Members, including SSS self-employed and voluntary
members, who continued paying premiums to PhilHealth, have reached 60
years old and have met the required 120 monthly premiums as provided
for by law
Retired underground mine workers who have reached the age of retirement
as provided for by law and have met the required premium contributions
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
B. DEPENDENTS
Legal spouse (non-member or with inactive membership)
Children: legitimate, legitimated, acknowledged and illegitimate (as
appearing in birth certifcate), adopted or step below 21 years of age,
unmarried and unemployed
Children 21 years old or above but suffering from congenital disability,
either physical or mental, or any disability acquired that renders them
totally dependent on the member for support
Parents (non-members or membership is inactive) who are 60 years old,
including step-parents (biological parents already deceased) and adoptive
parents (with adoption papers)
Tables 6 show the number of benefciaries (members and dependents) enrolled in each
of the fve PhilHealth Programs since 2000, while Table 7 estimates the population
covered by PhilHealth. Both tables exhibit the steady, impressive growth of total
coverage of PhilHealth from 2000 to 2011. Specifcally, members increased by almost
20 million people and benefciaries rose by 49 million people in this timeframe.
Table 6: Number of Members and Benefciaries Covered by PhilHealth, 2000-2012
Year
Government
Employed
Privately
Employed
Individually-
Paying
Overseas
Workers
Non-Paying/
Lifetime
Members
Sponsored
Members
Total
Mem-
bers
Benef-
ciaries
Mem-
bers
Benef-
ciaries
Mem-
bers
Benef-
ciaries
Mem-
bers
Bene-
fcia-
ries
Mem-
bers
Ben-
efcia-
ries
Mem-
bers
Benef-
ciaries
Mem-
bers
Benef-
ciaries
2000 1,868 6,967 5,293 19,126 43 1,908 - - 347 1,596 7,551 29,597
2001 2,011 8,948 5,291 20,767 930 4,182 477 716 619 2,847 9,328 37,460
2002 2,137 10,199 4,905 19,576 1,364 6,755 487 730 1,261 6,304 10,154 43,565
2003 1,645 7,632 5,938 23,155 555 2,744 76 130 1,762 8,741 9,976 42,401
2004 1,689 7,866 5,947 23,556 1,329 6,563 1 23 6,258 31,291 15,224 69,299
2005 1,846 7,493 6,450 23,188 1,889 8,471 545 2,673 20 334 2,492 12,440 13,242 54,599
2006 1,288 5,385 6,558 23,403 2,013 9,148 1,187 5,172 263 448 4,946 24,847 16,256 68,403
2007 1,781 7,420 6,998 24,858 2,427 11,069 1,586 6,912 337 572 2,721 13,635 15,850 64,467
2008 1,856 7,740 6,379 23,185 2,723 12,509 1,837 8,059 403 685 3,264 16,491 16,461 68,669
2009 1,902 8,935 7,007 28,608 3,326 14,973 2,105 8,614 462 846 5,382 19,202 20,182 81,178
2010 1,949 6,581 7,863 22,633 3,748 10,920 2,337 6,900 500 846 6,045 22,104 22,441 69,985
2011 2,010 5,904 8,850 18,097 4,339 9,905 2,571 5,086 572 945 9,574 38,449 27,916 78,386
First
quarter
of
2012
2,017 5,955 9,095 18,586 4,578 10,467 2,618 5,168 593 989 9,031 36,504 27,933 77,669
Source: 1997 to 1998: Comptrollership Dept.; 1999 to 2011: Human Resource Dept. Philhealth
Note: Blank spaces mean No Available Data
39 CHAPTER 3: HEALTH CARE COVERAGE
Coverage grew from 38% of the total
population in 2000 to 82% in 2011. In this
period, the growth of members (216%) was
greater than that of dependents (144%)
except perhaps in 2011, which, as will be
mentioned later, is linked to PhilHealths
effort to clear their list of benefciaries
to prevent fraudulent practices in
the incorporation of dependents.
Unfortunately, being enrolled or registered
in PhilHealth is quite different from being
eligible to use the benefts. This issue will
be analyzed in Chapter 6.
While the coverage has grown signifcantly
in the last decade, almost 20% of the
population is still not covered and has
no access to quality health care, which
makes the system far from being universal.
However, it should be recognized that
compared to other countries in the
region, according to data presented by
Tangcharoensathien et. al. (2011), the
Philippines is located in a good position:
below countries like Malaysia and
Thailand which have coverage bordering
100% of total population, but the country
has a better result than Indonesia (48%),
Vietnam (54.8%) and Cambodia (24%).
Upon analyzing the composition of coverage according to the different components
of the program, it is noticeable that the majority of benefciaries fall under the
Sponsored Program, which in 2011 covered 38.4 million benefciaries, representing
49.1% of all the benefciaries of the system. This undoubtedly refects the equity
objectives sought by the program since these are low-income benefciaries (see
Chapter 6). The privately-employed component comes in second place, covering 18
million benefciaries in 2011 (23.1%). These are followed, in order of magnitude, by:
the Individually Paying Program (12.6%), Government employed (7.5%), Overseas
workers (6.5%), and Lifetime members (1.2%).
If the number of members, instead of that of benefciaries, is considered, the above-
mentioned percentages are considerably altered and will change even the order of
the components. This is strongly linked to the number of dependents incorporated,
on average, into the different programs. Figure 8 compares the total percentage of
members and benefciaries of the different components, where the Sponsored Program
has, on average, the greatest number of dependents and benefciaries (49.1% of the
total) vis--vis 34.3% of the total members. As should be expected, since it is an older
adult population, the share of Lifetime Members is 2% of the total members and
1.2% of benefciaries.
Table 7: Percentage of the Total Population
Covered by PhilHealth, 2000-2012
Year
Population
(projected)
Estimated
Benefciaries*
%
2000 77,000,000 29,596,703 38
2001 79,000,000 36,744,229 47
2002 80,000,000 43,564,610 54
2003 82,000,000 42,401,432 52
2004 84,000,000 69,506,343 83
2005 85,000,000 54,598,650 64
2006 87,000,000 68,402,639 79
2007 89,000,000 64,467,384 72
2008 91,000,000 68,669,304 75
2009 92,000,000 81,178,456 88
2010 92,000,000 69,984,584 76
2011 96,000,000 78,386,398 82
First
quarter
of 2012
96,000,000 77,669,321 81
Source: PhilHealth, Comptrollership Department (1997
to 1998); Human Resource Department (1999 to 2011)
*Total from Table 6
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Different measures are being carried out by PhilHealth to fght fraud and abuse
problems, specifcally pertaining to members declaring non-dependents as
dependents. To this end, PhilHealth has set up a Fraud Prevention and Detection
Unit, now called the Fact Finding Investigation and Enforcement Department, which
aims to control and supervise the system and prevent the proliferation of adverse
selection practices of benefciaries as well as fraudulent practices by providers, and
the cleansing of the list of benefciaries in the system.
The improved method for counting benefciaries has had a bearing on the statistics
herein presented. In the earlier years, only the principal members were enrolled in the
program; PhilHealth failed to get the data on their dependents and just accepted who
the dependents were as identifed by members. Recently, there was a change in how
benefciaries were counted, in which data from administrative records of dependents
were based on actual count. While the number of dependents was more speculative
and based on an adopted multiplier linked to a standard family, PhilHealth now relies
on an actual count basis. Consequently, the number of benefciaries in the system
continues to show a different pattern than that of the direct members, basically
due to administrative reasons. Therefore, for a better assessment of the evolution of
coverage, it is advisable to analyze the data corresponding to direct members.
The evolution of the Sponsored Program (SP) coverage has been erratic. As mentioned,
SP members included families who are listed in the targeting system (NHTS-PR) and
those identifed as poor by the sponsoring LGUs. The number of benefciaries went
up from 1.6 million in 2000 to 31.3 million in 2004. Thereafter, it decreased to as
low as 13.6 million in 2007. This is due to the 5 Million Program that was put into
practice in 2004 with the goal of enrolling as many households as possible, but was
later downsized to 2.5 million and ultimately expired by the end of 2007. Thus, the
7.2%
31.7%
15.5%
9.2%
2.0%
34.3%
7.5%
23.1%
12.6%
6.5%
1.2%
49.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Government
Employed
Private
Employed
Individually
Paying
Overseas
Workers
Lifetime
Members
Sponsored
Program
members
beneficiaries
Figure 8: Members and Benefciaries of NHIP components, 2011 (% of total)
Source: PhilHealth, Comptrollership Department 1997 to 1998);
Human Resource Department (1999 to 2011)
41 CHAPTER 3: HEALTH CARE COVERAGE
SP showed an explosive growth in 2004 and an equally dramatic decrease until its
disappearance in 2007.The funds for this initiative came from the Philippine Charity
Sweepstakes Offce (PCSO) without any LGU contribution. When funding from the
PCSO stopped, the number of sponsored members sharply declined.
After 2007, SP resumed its upward trend and reached 38.4 million benefciaries in
2011. This can partly be explained by the new health sector plan put in place in
2010 by the new administration which seeks to strengthen PhilHealth programs and
ensure universal health care (Bala, 2012-I). The new health sector plan aimed to
increase the number of poor people enrolled in PhilHealth and improve the outpatient
and inpatient benefts package. A full government subsidy is offered for the poorest
20% of the population, and premium for the second poorest 20% will be paid in
partnership with the LGUs (WHO, 2011). The explosion of members and benefciaries
under this component is thus understandable and the new policy appears to have
made up for the adverse effects of the global fnancial crisis.
The evolution of the PhilHealth coverage differentiating between the contributory and
non-contributory components shows the growing importance of the non-contributory
component based on a steady growth of the number of its benefciaries (save in 2005
and 2007). On the other hand, there is a decrease in the contributory component
share, largely since 2009, in line with the international fnancial crisis and, more
importantly, with the above-mentioned cleansing of the members list. Thus, while in
2008, 77% of the population covered by the NHIP was made up of the contributory
part, in 2011, such proportion decreased to 50% (see Figure 9). The inclusion of
a signifcant number of the population without health coverage is positive, but its
effects in terms of fnancial sustainability should not be overlooked. To cite, 93%
of total premium contributions in 2011 came from contributory components (see
Chapter 7).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Contributive Non contributive
Figure 9: Benefciaries of Contributory and Non-contributory
Components of NHIP, 2001-2011 (in percentages)
Source: PhilHealth, Comptrollership Department 1997 to 1998);
Human Resource Department (1999 to 2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Relating the members of each program with their reference population group, which
is the population group each program targets to serve, allows some preliminary
fndings about the level of non-compliance in those programs. For example, based
on the number of members in the Employed Sector and Individually Paying Programs
in 2010, the following were identifed
8
:
As expected, the component with the highest share in the reference population a.
is that of the government sector, which covers as many as 64.4% of all civil
servants.
Second is the private-sector employee component, with 54% coverage relative b.
to the corresponding population group.
In the IPP component, there is a signifcant trend of incorporating members c.
into the program leading to a steady increase in the proportion of coverage
relative to informal employees which was 20.3% in 2010. However, despite the
progress made, such share is still low and shows the limited coverage of this
sector, in view that the informal sector is above 50% of the labor force. Hence,
there is still a need to develop a strategy to effectively reach members of this
sector.
8 The data on employed, unemployed population and rate of activity are available in Appendix Table 6.
Table 8: Economically Active Population (EAP), Employed and Members of Employed Sector
and Individually Paying Programs as Percentage of their Reference Population, 2001-2010
Year
EAP
(in
thousands)
Formal and
informal
employees
(in
thousands)
Government
members/
formal
public sector
employees
(%)
Private
sector
members/
formal
private
sector
employees
(%)
IPP
members/
informal
sector
employees
(%)
Total
contributory
members/
Total
employees
(%)
2001 32,809 29,156 86.10 43.70 6.30 28.20
2002 33,936 30,062 89.90 39.90 8.90 28.00
2003 34,571 30,628 69.50 52.60 3.30 26.60
2004 35,862 31,613 69.80 47.40 8.00 28.40
2005 35,381 32,312 75.30 52.60 10.70 31.50
2006 35,464 32,962 50.80 52.50 11.20 29.90
2007 36,213 33,560 67.90 54.00 13.50 33.40
2008 36,805 34,089 68.10 48.00 15.10 32.10
2009 37,892 35,061 66.40 50.70 18.10 34.90
2010 38,894 36,035 64.40 54.00 20.30 37.60
Source: PhilHealth, Comptrollership Department and Human Resource Department;
Based on BLES (2005, 2010 and 2011)
43 CHAPTER 3: HEALTH CARE COVERAGE
In an aggregate way, the contributory components share in the NHIP is growing d.
relative to the number of employees in the Philippines, covering 37.6% of the
employed population in 2010, while the share of these components in the total
of the NHIP has declined.
Lastly, the total number of the Non-Paying Lifetime Members account for less e.
than 10% of the population older than 60, thus confrming the history of weak
contributory practices of Filipino workers.
The Overseas Workers Program (OWP) is one of the most characteristic features of the
Philippine Health System. Due to surplus labor, the Philippine Overseas Employment
Administration (POEA) promotes labor emigration, thus making the Philippines rank
third among top labor-exporting countries. The Commission on Filipinos Overseas
(CFO) estimates a total of 8.5 million Filipinos abroad. Out of this total, 92% are
regular migrants where 47% are permanent and 45% temporary (FES, 2011)
9
.
In light of the above-mentioned data, the Philippines have signifcant remittances
(about US$23 billion annually), which considerably improve the life conditions of
the migrants families left behind. According to World Bank estimates, Philippines is
the third country with the largest remittances, after China and India (World Bank,
2012).
OWP benefciaries have particular relevance because, in most cases, the members
are abroad but their dependents reside in the Philippines. Therefore, the existence
of a component providing coverage to this segment of the population constitutes an
innovative and virtually unique health policy.
The private sector also provides health care services to Filipinos through voluntary
prepaid medical insurance. In some cases, such insurance is additional to that
granted by the social security services, thus resulting in double coverage of the
higher-income strata. Nonetheless, despite the growth of this subsector, it accounts
for barely 10% of the insured population (WHO, 2011).
3b. Reasons for Potential Decline in Coverage and Impact of the Financial
Crisis
It has been demonstrated that the percentage of the total population of PhilHealth
benefciaries generally shows a growing trend throughout time, albeit still insuffcient
to reach the aspired universal coverage. The expected evolution of health coverage
for the population in the next few years is based on fve sets of effects that refect the
situation of the components of PhilHealth.
First, the contributory component of coverage is closely related to labor market
dynamics: the number of public and private employees, the level of informality and
salaries, etc. In a moderate economic growth scenario, the expected behavior of this
component would be stabilized as it is improbable under the existing conditions
that there will be a signifcant change in the size of public or private sector formal
employees.
9 The Philippines signed bilateral social security agreements with Austria, United Kingdom, Ireland, Spain, France, Canada, Switzerland, Belgium, Korea,
Israel, and the Netherland (FES, 2011).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Second, OWP coverage will depend on the demand for Filipino workers abroad and,
consequently, on the economic development of the countries importing Filipino
labor.
Third, voluntary contribution to the IPP and OWP components of the NHIP as well
as private coverage (e.g. HMO) is closely linked to individual decisions, but also
associated to the economic activity and formal employment. In the case of private
coverage, it is inversely related to the scope and quality of services provided by the
different PhilHealth components.
Fourth, the non-contributory state-fnanced coverage is strongly linked to the increase
of general poverty and extreme poverty incidence (SP benefciaries) and demographic
dynamics, (e.g., as the population ages there would be more non-paying retirees and
pensioners) therefore, the government has to increase fnancing to programs aimed
at the needy. According to Mesa-Lago, et al. (2011), the poverty incidence among
the population (individuals) decreased from 33.1% to 24.9% in 1991-2006 but rose
and stagnated at 26.5% in 2006-2009; individual poverty increased by 3.3 million
in 2003-2009 or 17%. There are also signs of a resurgence of poverty aggravated by
global crisis, typhoons, and the El Nio phenomenon that hurt the local economy
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Unemployment rate
NHIP Coverage rate
GDP million constant pesos
(2000)
Left axis
Right axis
Left axis
Pesos
Figure 10: Unemployment Rate, NHIP Coverage Rate and GDP of Philippines, 1998 - 2011
Source: National Statistical Coordination Board, National Statistics Offce, Labor Force Survey, Public Use Files
and Philippines National Health Accounts (2010)
45 CHAPTER 3: HEALTH CARE COVERAGE
in 2009. Population poverty incidence was estimated at 33% in 2010 (NAPC, 2011).
If poverty rates increase, a higher demand for SP services might be expected, hence
putting pressure on this programs fnancing which will further be exacerbated by
other problems such as decreased contributory coverage.
The SP should provide coverage to the lowest income quintiles (the poorest 40%
of the population) so that in a scenario perfectly focused and completely covered,
the worsening socio-economic conditions resulting from a crisis will not result in a
greater total coverage although it might refect a higher number of people that might
not pay for coverage voluntarily. In this context, the ability of this component to have
a countercyclical response is strongly limited, reducing the possibilities of gaining
access to health coverage for a wide range of population sectors.
Fifth, with regards to the coverage of the population older than 60 (NPP benefciaries),
population projections do not show a signifcant expansion of coverage demand
in this segment even when it requires more and costlier health services due to its
characteristics.
In 2009, the global fnancial crisis hit the Philippines relatively harder than in some
countries in the region such as China, Vietnam, and Indonesia, but less so than
others such as Thailand, Malaysia, and Korea. Along with other countries in the
region, the severe world crisis affected Philippine trade and fnancing (IMF, 2012a).
According to the data from the Department of Finance (DOF), Gross Domestic
Product (GDP) growth in the country was about 1.1 % in 2009 ( roughly -1 % in per
capita terms), down from over 7.1% in 2007 and 4.2% in 2008. In 2010, the growth
rate reached 7.6%, but reverted to 3.9% in 2011. Demand for exports declined,
which also pushed down consumption and investment. The fnancial system had
limited exposure to Europe and little reliance on foreign wholesale funding, but the
Philippines was still affected because of pullbacks of credit by European banks to
the domestic corporate sector and a retreat by foreign investors from local equity
and bond markets. Furthermore, remittances, which comprised 10% of GDP, also
declined. Therefore, all economic activities have been affected, and both employment
and formality levels decreased and negatively affected health coverage.
Unlike in the case of pensions, the effects on the health care system were immediate
as the lack of payment eventually led to the interruption of service provision. Most of
those who became unemployed lost their PhilHealth entitlement, unless they became
IPP members and paid the contribution voluntarily. Alternatively, according to the
conditions of access to the different PhilHealth programs, if an unemployed person
falls among the households in the frst quintile, he might gain access to the SP
coverage.
Data in Table 8 showed that since 2009, despite the crisis, general contributory
coverage rose based on the number of members (only decreased in the government
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
sector)
10
. The same behavior is observed in the case of the programs for those
employed, IPP and OFP, whose payments are voluntary. In the latters case, this can
be associated with a prevention strategy by such households within the framework
of the crisis. The lack of unemployment insurance or assistance benefts, which
usually act as automatic stabilizers during recessions, is an important limitation
to counteract the crisis effects. Thus, large groups of the population use their own
resources to be covered during the unfavorable circumstances of the economic cycle,
paying voluntarily contributions to the NHIP to sustain their health coverage and
avoid higher expenditures on health that could worsen their socio-economic situation
in the long run.
In recent years, there has been a steady deterioration in the international
macroeconomic environment. The lower expansion rates of the Asian economies
would most likely negatively affect the Philippine economy. In an eventual critical
scenario, unemployment could raise the number of informal workers who have low
health coverage (Weber and Piechulek, 2009) (see Figure 10). Also, the salary base
will stagnate and contributions will subsequently decrease. Moreover, if business
opportunities shrink due to an economic downturn, voluntary members may cancel
their membership, which may lead to a lower coverage degree of the NHIP contributory
10 As shown in section 3.a, coverage fell due to the cleansing of the list of benefciaries.
Figure 11: Crisis Impact on PhilHealth Coverage by Group, 2010 (% structure)
Source: Own elaboration based on PhilHealth Annual Report (2010)
47 CHAPTER 3: HEALTH CARE COVERAGE
part. Nevertheless, this scenario does not seem to be the most likely in the next few
months; the latest estimates are more optimistic as shown in Chapter 4.
To better cope with the crisis, the NHIP should assign more resources to the SP in order
to fnance non-contributory health services for the poor. In fact, within the framework
of a crisis, a higher number of benefciaries is incorporated into this component,
thus making up, albeit partially, for the decrease in benefciaries in the contributory
part (showing that the incorporation of new SP members is more dynamic than in
the other components). In this context, the non-contributory component might act in
a countercyclical way, showing a gradual increase based on the incorporation of the
new SP benefciaries during a crisis. However, it is diffcult to rapidly incorporate new
SP benefciaries because of red tape, timing and unsustainable funding, all of which
are signifcant challenges that should be addressed to effectively provide health care
services to the poor in the long run.
Furthermore, the crisis has reduced resources from national and local governments,
both of which are responsible for fnancing the SP services. Presently, it remains
unclear if additional allocations will become available in such circumstances. Figure
11 sums up the impact on the above-mentioned effects from the international crisis
on the NHIP coverage.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
CHAPTER 4: HEALTH EXPENDITURE
AND FINANCING
Having introduced the situation and coverage of health, the frst half of this chapter
analyzes the systems fnancial aspects starting with two introductory sections: (1) a
comparison of the countrys spending level with that in other regions and countries,
and (2) basic data of the Philippines public accounts to grasp the fscal leeway for
reforms in the sector. The second half of the chapter looks at the evolution and structure
of health accounts, as well as the fnancing of each of the public programs.
4a. Health Expenditures in a Comparative Perspective
The resources earmarked for health fnancing in the Philippines remain inadequate.
According to estimates by the World Health Organization (WHO), resources spent
for health in 2010 reached 3.6% of GDP. In comparison with other countries in
the region, the Philippines percentage is low (i.e., Vietnam, 6.8%; Cambodia, 5.7%;
China, 5.1%; Laos, 4.5%, and Thailand, 3.9%). Table 9 presents the estimates for the
different regions in the world according to the WHO classifcation.
Table 9: International Comparison of Health Care Expenditures, 2010
Countries
Total
as
% of
GDP
% of Total exp.
in Health
Health
as %
Total
Public
Exp.
Private
prepaid
plans
as % of
total
private
Per capita
expenditure on
health (PPP int.$)
Public Private Total Public
Philippines 3.6 35.3 64.7 7.6 10.6 142 50
Regions
African 6.3 50.3 49.1 10.3 8.1 220.6 132.1
Americas 7.5 57.6 42.4 13.2 19.9 1056.9 616.9
Eastern
Mediterranean
5.1 54.5 45.5 8.0 11.8 599.7 387.0
European 8.2 66.5 33.4 12.9 12.1 2242.3 1656.8
South-East Asia 4.5 48.2 51.8 7.1 5.1 170.1 101.9
Western Pacifc 8.0 70.8 29.2 13.2 10.0 952.2 715.4
Source: WHO (2012)
49 CHAPTER 4: HEALTH EXPENDITURE AND FINANCING
Table 9 also shows that the state participation in total health expenditures is very
low as a result of different factors combined. On the one hand, it has a low tax
burden (12.3% of GDP in 2011) along with a low share of health spending in the
total state budget (7.6%) (WHO, 2012). This share is similar to the average assigned
to the sector in Southeast Asian countries. A system that rests on the fnancing of
the private sector, which means there is a high proportion of out-of-pocket spending
necessary to gain access to health services or medicine, has been widely recognized
as a signifcant source of inequality (PAHO, 2002).
Additionally, total health spending per capita in US$ of Purchasing Power Parity
(PPP) is also low at US$ 142, an indication of poor coverage in health provision (see
Chapter 5). Public sector spending per capita is even lower US$ 50. Both indicators
are extremely low according to international standards.
A recent World Bank report highlights that the Philippines spending on public health
has not shown signifcant growth, even in periods of economic growth, opposite
to the international experience in this feld (see Figure 12). In fact, it points out
that the elasticity of public spending on health to GDP from 1995-2008 was about
0.9, implying that if this trend (of economic growth) continues, the share of public
expenditure on health to GDP will continue to decline (World Bank, 2011). This is
partly due to a low dynamism of LGU spending.
In addition, the last Country Report on the Philippines by the International Monetary
Fund (IMF) states that in order to be more inclusive, higher growth will need to be
accompanied by a set of mutual reinforcing policies and cross-country experience
suggests that higher health and education spending helps to increase the inclusiveness
of growth (IMF, 2012a: 19).
Figure 12: Public Health Spending in Emerging Economies,
1995-2007 (percentage of GDP)
Source: IMF (2012a)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Summing up, the Philippines spending on health is low, both in terms of GDP and
the public budget, as well as in per capita terms. Additionally, the public sector share
is limited compared to the private sector share. In contrast with the weak trend in
public spending, the importance of private health spending (albeit not its level of
coverage) is remarkable with a very high participation in international terms (64.7%),
but has very negative effects on the possibility of reaching the objectives of universal
and fair health coverage.
The degree of inclusiveness can be measured by the ratio of the income of the bottom
quintile and the mean per capita income. Figure 13 shows that such inclusiveness is
very closely associated with the low public health spending and that the Philippines
is one of the countries with the lowest degree of inclusiveness and health spending.
4b. Fiscal Accounts and Health Expenditures
This section analyzes the Philippines macro-fscal conditions, which are important
because of their direct implication on the fscal leeway available to carry out public
policies in the health sector. Macro-fscal consistency, sustainable fscal defcit and
inter-temporal indebtedness levels are key variables to assess the fscal space of any
sector, including health.
Figure 13: Degree of Inclusiveness versus Health Spending
Source: IMF (2012a)
51 CHAPTER 4: HEALTH EXPENDITURE AND FINANCING
Figure 14 presents the evolution of the Philippine GDP, the infation rate and the
exchange rate in 1999-2011. An acceleration of economic growth occurred in 2003-
2007 peaking at 7.1%. In 2008, growth slowed down and in 2009, coincidentally
with the outburst of the international fnancial crisis, GDP grew only by 1.1%. In
2010, the economy regained its dynamism, with a rise of 7.6%. The correlation of the
economic activity and the infation rate is high, although the levels of price expansion
do not present alarming values, with a peak of 9.3% in 2008.
The Philippines had a steady level of fscal imbalances throughout the period although
there was a gradual decrease in GDP terms from a maximum of -5% in 2002 to -0.2%
in 2007. It regained momentum in 2009 and 2010, and was around -2.0% in 2011
(see Table 14). Consequently, while the countrys total debt has been reduced since
the peak in 2003, it still absorbs a high proportion of resources for the payment of
services and interests, accounting for almost 60% of GDP (see Figure 15).
According to the Senate Economic Planning Offce (SEPO): The national government
defcit for 2012 is targeted to reach PhP 279.1 billion (2.6% of GDP), higher than last
years defcit. For 2013, the defcit is set at PhP 241.0 billion or 2.0 % of the GDP, which
explains the commitment of the authorities to pursuing fscal consolidation in 2013,
which means bringing down the defcit and debt to manageable levels. The breakdown
of the consolidated fscal results shows that most of the defcit corresponds to the
national governments borrowings. On the other hand, the good fscal performance
of the social security, the fnancial institutions, and LGUs contribute positively to
the public sector consolidated results, albeit still insuffcient to compensate for the
defcit.
In the past ten years, the revenue effort as a percentage of GDP has not changed
signifcantly. In 2011, the revenue effort stood at 15.1% of GDP, which were results
from state tax revenue (13.3% of GDP), most of which was collected through the
Bureau of Internal Revenue (10.3%). The rest (2.8%) corresponds to the collections
by the Bureau of Customs (Department of Finance, 2012).
3
4
3
3
5
6
5
5
7
4
1
8
4
0
10
20
30
40
50
60
0
1
2
3
4
5
6
7
8
9
10
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Real GDP (left axis) Inflation (left axis) Foreign exchange rate (PhP:$US) (right axis)
Figure 14: Macroeconomic Variables, 1999-2011
Source: Own elaboration based on Department of Finance data (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
The national governments revenue structure for 2010, on the other hand, consisted
of the taxes on net income and profts (40.5%), followed by taxes on goods and
services (23.6%) and taxes on international trade and transactions (21.5%), while
non-tax revenues accounted for only 9.5% of total revenues. The level of tax burden
was very low compared to its neighboring countries. In 2010, the Philippines only
outperformed Cambodia (10.8%) and Indonesia (11.6%) in tax effort, with Vietnam
(24.3%) topping the list (SEPO, 2012).
Table 10: Consolidated Public Sector Financial Position,
2010-2013 (Billon PhP)
2010 2011 2012 2013
Total Surplus+/Defcit- (403.24) (178.75) (213.92) (158.34)
as percent of GDP (0.04) (0.02) (0.02) (0.01)
Total Public Sector
Borrowing Requirement
(389.08) (224.96) (314.52) (287.29)
as percent of GDP (0.04) (0.02) (0.03) (0.02)
National Government (314.47) (197.75) (279.11) (241.00)
CB restructuring (7.69) (3.54) (3.40) (5.28)
Monitored GOCCs (66.93) (23.67) (32.01) (41.01)
SSS/GSIS 40.12 47.97 66.76 63.70
BSP (63.72) (47.43) 1.00 1.00
GFIs 9.45 9.94 9.34 12.28
LGUs 34.10 34.72 23.51 25.47
Other adjustments 13.32 1.02 0.00 26.50
Source: SEPO (2012)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total debt/ GDP Domestic debt /GDP
Foreign/GDP
Figure 15: Evolution of the Philippines Debt, 1998-2010
Source: Own elaboration based on Department of Finance data (2012)
53 CHAPTER 4: HEALTH EXPENDITURE AND FINANCING
According to the IMF, the tax burden has remained constant over the last decade
due to generous and expanding tax incentives, reducing tariff rate, deteriorating
tax compliance caused by ineffective and ineffcient revenue administration, and a
gradual erosion of excise revenue due to non-indexation (IMF, 2012b).
-3.4%
-3.7% -3.8%
-5.0%
-4.4%
-3.7%
-2.6%
-1.0%
-0.2%
-0.9%
-3.7%
-3.5%
-2.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Overall Surplus/ Deficit (right axis) Revenue Effort (left axis)
Total Expenditures (left axis)
Figure 16: Revenue, Expenditure and Balances, 1999-2011
Source: Own elaboration based on (DOF 2012)
29.6%
28.1% 27.7%
31.1%
32.8%
56.8% 57.1% 56.6%
55.2%
54.5%
0.8% 1.1%
0.4% 0.6% 0.9%
12.8%
13.7%
15.4%
13.1%
11.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2007 2008 2009 2010 2011
Personnel services Maintenance and operating expenses
Net lending Capital outlays
Figure 17: Composition of National Government Spending, 2007-2011
Source: Own elaboration based on Department of Budget and Management (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Regarding spending, minimal change has been observed in the total spending/
GDP ratio: from 18.2% of GDP in 1999 to 16.0% in 2011. In the composition of the
national public spending, the maintenance and operating expenses item stands out,
with 54.5% of the total spending in 2011. Interest expenses (which in 2011 account
for 20.0% of total spending) and subsidies and donations (25.6% of total spending)
are included in this line item. Spending on personnel shows an upward trend, that
which accounted for 32.8% of total spending in 2011. In contrast, there is a decrease
in the capital spending share, which barely reaches 11.7% of the total spending in
the last year. It is possible that this structure provides some rigidity to the public
budget, reducing the leeway for authorities to adjust spending practices to changes
in the economic cycles (Department of Finances, 2012).
Far more interesting for the purposes of this survey is to evaluate the spending on
the basis of its objectives. The national governments spending is focused on social
services (31.7% of the total and accounted for more than half of the social spending
in 2011). Education gets the highest allocation at 17.0% of the total spending. The
economic services represent 24.2% of the total spending while spending on public
services such as debt interests accounted for 18.3% of the total spending in each
case. Health spending, having been decentralized, accounts for less than 3% of the
total national public spending (see Table 11).
Table 11: National Public Expenditures, 2009-2011
Public Expenditures
Percent Distribution
2009 2010
2011
Proposed
TOTAL 100.0 100.0 100.0
Social Services 28.2 31.7 31.7
Education, Culture, and Manpower Development 15.3 16.5 17.0
Health 2.1 2.3 2.8
Social Security, Welfare and Employment 3.3 5.7 5.8
Housing and Community Development 0.5 0.4 0.4
Land Distribution 0.3 0.2 0.1
Other Social Services 0.1 0.1 0.1
Subsidy to Local Government Units 6.7 6.5 5.6
Economic Services 25.9 22.0 24.2
Defense 6.2 6.2 6.2
General Public Services 19.1 17.5 18.3
NET LENDING 0.6 0.9 1.3
DEBT SERVICE - INTEREST PAYMENT 20.0 21.7 18.3
Source: Department of Budget and Management (2012)
55 CHAPTER 4: HEALTH EXPENDITURE AND FINANCING
4c. National Health Accounts
Table 12 presents the latest available offcial data on health spending. In addition
to the above-mentioned data about the scarce magnitude of total national revenue
allocated to the sector, the set-up of the sector shows the process of decentralization
(devolution) of public spending from the national to the local governments. As DOH
(2005) states, with the devolution of health services since 1991, the LGUs have been
mandated to provide direct health services, particularly at the primary and secondary
levels of health care (Rosadia, 2012-I). Under this set-up, provincial and district
hospitals are under the provincial government while the municipal government
manages the RHUs and BHS.
In 2007, the share of public spending on health reached 0.9% of GDP (26.25% of
total spending). There is an even share of both levels of government in public health
spending, although it is expected that the national government will have lower
shares as the local governments begin taking on higher shares in the fnancing
health services of the NHIP Sponsored Program component. Nevertheless, both levels
turn out to be minimal relative to the total social service spending. This highlights
the importance of strengthening the health budget and spending in both levels of
government. Additionally, the spending on social security remains highly inadequate
accounting at only 0.3% of GDP (8.52% of total spending), especially in contrast with
the objective of reaching universal coverage (see Table 12).
Table 12: Health Expenditure in the Philippines, 2007
Source of funds
Million
PhP
% of
total
% of GDP
Public sector 61,507 26.25 0.90
National Government 30,441 12.99 0.50
Local Government 31,066 13.26 0.50
Social Security 19,972 8.52 0.30
NHIP 19,838 8.47 0.30
Employees
Compensation
134 0.06 0.00
Private Sources 151,909 64.83 2.30
Private Out-of-pocket 127,346 54.35 1.90
Private Insurance 4,175 1.78 0.10
Health Maintenance
Organizations
11,941 5.10 0.20
Employer-Based Plans 5,821 2.48 0.10
Private Schools 2,627 1.12 0.00
Rest of the World 0.933 0.40 0.00
Grants 0,933 0.40 0.00
Total 234,321 100.0 3.50
Source: Own elaboration based on National Health Accounts (2010)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
0
10
20
30
40
50
60
70
80
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
S
h
a
r
e

o
f

t
o
t
a
l

h
e
a
l
t
h

e
x
p
e
n
d
i
t
u
r
e

(
%
)
External resources Public Private Out of pocket
Figure 18: Public and Private Health Spending in the Philippines, 1995-2010
Source: WHO (2012)
Figure 19: Philippine National Health Accounts Structure, 2007
Source: Own elaboration based on National Health Accounts (2010)
57 CHAPTER 4: HEALTH EXPENDITURE AND FINANCING
Three interrelated reasons explain the relatively slow and cautious increase in
the share of social security to total health expenditure. First, although PhilHealth
is trying to improve its services, its benefts are still low (see Chapter 5). Second,
partly because benefts are low, coverage of the informal sector has not expanded at
the necessary rate to provide the reference population with complete coverage (see
Chapter 3). Third, as a consequence of the decentralization process, insurance is
unlikely to be effective in areas where local fnancing is severely limited and where
administrative infrastructures are weak (DOH, 2005).
On the other hand, the private subsector share was 2.3% of GDP and 64.8% of total
spending, out of which 83.8% were out-of-pocket expenses, thus leaving the fnancial
and health status of the poor and low-income group vulnerable.
Trends in the various components of health spending in 1995-2010 show the slow
dynamism of public spending, and a downward trend since 2000, while private
spending and out-of pocket expenses have shown steady increases since 2000 (see
Figure 18). Finally, Figure 19 summarizes the Health Spending Structure in the
Philippines.
4d. Health Financing
The fragmentation of the health system into different subsectors and covered
populations is also refected in the various sources of fnancing. Public health, both
at the central and the local government level, is fnanced with resources from their
respective funds (i.e., coming from taxation, other resources or external grants).
The NHIP is fnanced with the payroll tax or voluntary annual contributions, except
for the programs targeted on the extreme poor and the NPP. In the Employed Sector
Program (for public and private sectors), the monthly premiums (3% of the members
monthly salary base) are shared equally by employees and their employers and
remitted to PhilHealth by the latter. This level of contributions over salaries is similar
to those of countries in Asia and the Pacifc, but insuffcient to fnance universal health
coverage, which might be a factor to the workers signifcant private spending
11
.
Each of the PhilHealth programs has different requisites regarding the premium its
members should pay, as shown below:
1. Employed Sector Program: The premium contribution of each employed
member is up to 3% of his/her basic monthly salary (with PhP 50,000 cap in
2012). The employer and the employee split the premium, and it is directly
deducted from the members salary.
2. Individually Paying Program: Members in the IPP are obliged to pay the
total contribution, on a quarterly, semi-annual or annual basis. Premiums for
members with monthly salary over PhP 25,000 are PhP 3,600 per year; others
have to pay PhP 2,400.
11 In the region of Asia and the Pacifc, the average rate of contribution for social security is around 19%, 16.2% of which goes to pensions and leaves
2.8% to fnance health and other social security programs. The Philippines, therefore, is not far from these parameters. In contrast, the average data in
Europe are 23% to fnance pensions and 8% for the rest (US-SSA, 2012).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
3. Sponsored Program: The total contribution (PhP 2,400 per year) is paid by
both the central government and LGUs.
4. Overseas Filipino Workers: The worker has to make an annual payment of
PhP 1,200 during 2012 and PhP 2,400 since 2012.
5. Lifetime Member Program: This program is free for members that have already
completed their 120 monthly contributions.
In 2007, PhP 234.3 billion was spent on health-related expenditures or 3.5% of the GDP.
Out of this total, around 65% involved private sources that included out-of-pocket,
private insurance, HMO, employee-based plans and private schools. Furthermore,
53% of the total spending is out-of pocket, which means that the burden of paying
for health care is still predominantly shouldered by individual families instead of by
the government or other insurance (Nyunt-U, 2012-I). The highest proportion of out-
of-pocket spending is on drug expenditures at about 70% (see Table 12).
The above sources of funds refect different insurance mechanisms with varying
degrees of ability to pool resources and spread health risk. The individual family,
through direct out-of-pocket expenditure, is the least effective and most ineffcient
health insurance institution. A familys income and size limit the resources that
can be pooled for health expenses, and since members are often exposed to similar
health risks, the family has limited risk-pooling capacity (DOH, 2008).
Summing up, the Philippines health care fnancing system is strongly fragmented
and inequitable. It is fragmented among the different components of the NHIP within
the social security and between the latter and public and private spending (Solon,
2012-I). It is inequitable due to the strong burden over individuals such as private
and out-of-pocket expenditures, further exacerbated by the ineffcient revenue
distribution in the country.
The fragmentation and inequitable distribution may further be affected by a number
of factors which include the widely dispersed LGUs given that the Philippines is an
archipelago (see Chapter 5) as well as the unequal fnancial capabilities of LGUs.
Under these circumstances, the decentralization process (or devolution of spending
to the LGUs) must be evaluated very carefully. International experience shows that
such process takes place in each region and territories with its own peculiarities, each
being different with its own health needs, budgetary restrictions, local and regional
health policies, and demand profles. Thus, the development gaps in the countryside
have resulted in worsening internal differences as fnancial possibilities vary widely
from region to region, and the fnancial transfer system between government levels
plays a key role (see Chapter 6). Summing up, the Philippines health fnancing and
resources are inadequate to reach the objective of access to universal coverage.
59
CHAPTER 5: SUPPLY OF SERVICES AND
SUFFICIENCY OF BENEFITS
The access to health services by the population depends on the existence of their
supply, the access conditions, and the degree to which the benefts provided by
public programs are adequate to meet the peoples needs.
5a. Health Services Supply
The distribution and coverage of health services supply largely determines the real
possibilities the countrys citizens have in gaining access to timely and quality
health services. This includes both the supply of health facilities and human health
resources. The general pattern in the Philippinesas in most developing countries
is the concentration of health services in relatively affuent urban areas (Mariano,
2012-I).
Table 13: Barangay Health Stations (BHS) in 2008 and Rural Health Units (RHU) in 2005
(Number and Rate per 100,000 Inhabitants, Rate of BHS per Barangay)
Region
Number of
BHS (2008)
(a)
Number
of RHUs
(2005) (b)
Number of
Barangays
(c)
(a) / (c)
(%)
BHS per
100.000
inhabitants
RHUs per
100.000
inhabitants
Philippines 17 2 42 40.5 19.2 2.6
NCR 12 431 2 0.7 0.1 3.7
CAR 599 96 1 50.9 39.4 6.3
I-Ilocos 992 150 3 30.4 21.8 3.3
II-Cagayan Valley 1 97 2 43.3 32.8 3.2
III-Central Luzon 2 265 3 57.9 18.5 2.7
IV-a 2 204 4 54.8 18.7 1.7
IV-b 689 77 1 47.3 26.9 3.0
V-Bicol 1 124 3 32.4 22.0 2.4
VI-Western Visayas 2 146 4 41.6 24.6 2.1
VII-Central Visayas 2 136 3 54.0 25.3 2.1
VIII-Eastern Visayas 883 157 4 20.1 22.6 4.0
IX-Western Mindanao 698 94 2 36.7 21.6 2.9
X-Northern Mindanao 1 94 2 50.8 26.0 2.4
XI-Southern
Mindanao
703 65 1 60.5 16.9 1.6
XII-Central Mindanao 957 50 1 80.2 25.0 1.3
XIII-Caraga 432 80 1 33.0 18.8 3.5
ARMM 600 2 24.1 14.6
Source: Philippine Health Statistics (2011) based on Department of Health
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Despite the devolution of health service responsibility to local governments, the supply
of such services did not improve. The reason is largely because the decentralization
design failed to develop the needed capabilities and resourcesboth fnancial and
humanin the LGUs, thus widening the gap in health resource allocation between poor
provinces, mostly rural, and higher-income provinces that are more urbanized.
As a result of the process of decentralization, public health services are now mainly
delivered by LGUs with the technical aid of the national government through the
DOH, albeit there are specifc campaigns and other national programs coordinated
by the DOH and the LGUs. Provincial governments manage secondary and tertiary
level facilities, and the national government retains management of a number of
tertiary level facilities. In a decentralized system as that of the Philippines, the nearest
services to households are the Barangay Health Stations (BHS).
According to the latest DOH available data in 2007, there were a total of 17,018 BHS,
with a spatial distribution shown in Table 13 that explains the disparity of resources
in the country. The number of BHS relative to the number of barangays per region is
higher in Regions XII (80.2%) and XI (60.5%), while in NCR, such proportion barely
reached 0.7% (see Table 13). These data should be supplemented with information
(not available) on the number of RHUs and city health centers located in each town/
city, with the larger towns/cities having more than one RHU or health center. In
2005, there were 2,266 RHUs or about 1.4 RHUs per town. The private sector delivers
services at all three system levels. Private primary services are provided through free-
standing clinics, private clinics in hospitals and group practice or polyclinics (WHO,
2011). Private health clinics, diagnostic/imaging centers, and laboratories operate in
larger towns.
0
200
400
600
800
1000
1200
1400
0
10,000
20,000
30,000
40,000
50,000
60,000
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
Government (Bed Cap) Private (Bed Cap)
Government (Hosp) Private (Hosp)
Figure 20: Number and Bed Capacity in Government and Private
Hospitals, 1976-2010
Source: Philippine Health Statistics (2011) based on the Department of Health
61 CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS
The DOH data available up to 2010 show that the number of public and private
hospitals rose from 1,607 in 1980 to 1,812 in 2010 (12.8%); the number of government
hospitals increased from 413 to 930 (76.8%), while private hospitals decreased from
1,194 to 1,082 (-9.4%). The public sector increased its share in total hospitals from
26% to 40% in 1980-2010, but it is still below that of the private sector which declined
from 74% to 60% (see Figure 20).
The distribution of hospitals also shows regional disparities in terms of facilities
of the public and private sectors. Region XI has the highest percentage of private
hospitals (82%) due to a lower allocation of public hospitals. Region IV-A has the
highest number of public hospitals and also the highest number of private hospitals
in the country (see Table 14 and Appendix Table 9).
On average, hospitals have 54.2 beds per hospital, with higher availability of beds in
the public sector (68) relative to the private sector (45) and a distribution of such beds
in a somewhat even fashion between government and private hospitals. However,
Table 14: Public and Private Hospitals by Region, 2010
Region Government Private Total
No. % No. % No. %
Philippines 730 40.3 1,082 59.7 1,812 100
NCR 51 27.9 132 72.1 183 100
CAR 38 66.7 19 33.3 57 100
I-Ilocos 41 33.3 82 66.7 123 100
II-Cagayan Valley 45 49.5 46 50.5 91 100
III-Central Luzon 60 30.3 138 69.7 198 100
IVA 67 28.6 167 71.4 234 100
IVB 37 57.8 27 42.2 64 100
V-Bicol 48 44.0 61 56.0 109 100
VI-Western Visayas 62 72.1 24 27.9 86 100
VII-Central Visayas 59 56.2 46 43.8 105 100
VIII-Eastern Visayas 51 67.1 25 32.9 76 100
IX-Western Mindanao 29 42.0 40 58.0 69 100
X-Northern Mindanao 37 33.9 72 66.1 109 100
XI-Southern Mindanao 20 18.2 90 81.8 110 100
XII-Central Mindanao 28 26.4 78 73.6 106 100
XIII-Caraga 35 59.3 24 40.7 59 100
ARMM 22 66.7 11 33.3 33 100
Source: Philippine Health Statistics (2011) based on the Department of Health
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
while the total number of hospitals and available beds has increased since 1980, the
number of beds per 10,000 inhabitants decreased from 18.2 in 1980 to 12.3 in 2010,
thus providing lower health resources for an expanding population.
According to data from the World Bank (2011), retail pharmacies and drug stores are
the main sources of prescription and over-the-counter drugs. They used to be simple
single-proprietorship businesses, but more recently, they have been dominated by
national retail pharmacy chains and franchises which now account for about 60% of
the market measured by value. In recent years, village and town pharmacies sponsored
by the government through the
DOH (e.g. Botikang Barangay,
Botikang Bayan) have been
revived and multiplied all over
the countrys poorer barangays
or in those lacking a private
retail pharmacy. However, most
of these government-sponsored
pharmacies have low turnover
and face diffculties with re-
supply.
The availability of human
resources in the health sector
shows a different story as there
is a high ratio of health workers
in the Philippines compared to
other countries. Despite a high
Table 15: Health Care Workforce, 2000-2010
Member
State
Physicians
Nursing and midwifery
personnel
Dentistry personnel
Pharmaceutical
personnel
Number
per 10,000
population
Number
per 10,000
population
Number
per 10,000
population
Number
per 10,000
population
PHILIPPINES 93,862 11.5 488434 60.0 45,903 5.6 49667 6.1
Low income 215761 2.8 522425 6.7 20954 0.3 37826 0.5
Lower middle
income
3742065 10.1 6208439 16.8 323311 0.9 1284050 3.5
Upper middle
income
2189890 22.4 4333111 44.5 634084 6.5 333219 3.7
High income 3024161 28.6 8315796 78.6 954301 9.1 931948 8.9
South-East
Asia Region
903408 5.4 2224133 13.3 111756 0.7 641499 3.8
Source: World Health Statistics (2012)
0
1000
2000
3000
4000
5000
6000
2001 2002 2003 2004 2005 2006 2007 2008
Doctors Dentists Nurses
Source: Philippine Health Statistics (2011) based on the Department
of Health
Figure 21: Number of Government Doctors, Nurses and
Dentists, 2001 to 2008of Health
63 CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS
and growing population, the Philippines still has a high ratio of nursing and midwifery,
dentistry, and pharmaceutical personnel, at one for every 10,000 Filipinos, similar to
other upper-middle income countries and higher-income countries (see Table 15).
Table 16: Government Doctors, Nurses, Dentists and Midwives,
Number and Rate per 10,000 Population by Region, 2008
Region Population
Doc-
tors
Dentists Nurses Midwives
Doc-
tors per
10.000
popula-
tion
Nurses
per
10.000
popula-
tion
Dentists
per
10.000
popula-
tion
Mid-
wives
per
10.000
popula-
tion
PHILS. 88,566,732 2,838 1,891 4,576 17,437 0.3 0.2 0.5 2.0
NCR 11,566,325 590 498 723 1,135 0.5 0.4 0.6 1.0
CAR 1,520,847 89 40 131 637 0.6 0.3 0.9 4.2
I-Ilocos 4,546,789 159 105 259 1,014 0.3 0.2 0.6 2.2
II-Cagayan
Valley
3,051,487 97 65 196 839 0.3 0.2 0.6 2.7
III-Central
Luzon
9,709,177 278 176 441 1,662 0.3 0.2 0.5 1.7
IVA 11,757,755 238 189 472 1,818 0.2 0.2 0.4 1.5
IVB 2,559,791 83 68 142 555 0.3 0.3 0.6 2.2
V-Bicol 5,106,160 157 85 273 1,072 0.3 0.2 0.5 2.1
VI-Western
Visayas
6,843,643 234 123 401 1,775 0.3 0.2 0.6 2.6
VII-Central
Visayas
6,400,698 177 117 328 1,534 0.3 0.2 0.5 2.4
VIII-Eastern
Visayas
3,915,140 155 94 201 904 0.4 0.2 0.5 2.3
IX-Western
Mindanao
3,230,094 100 44 203 697 0.3 0.1 0.6 2.2
X-Northern
Mindanao
3,952,437 138 74 241 1,052 0.3 0.2 0.6 2.7
XI-
Southern
Mindanao
4,159,469 75 69 127 743 0.2 0.2 0.3 1.8
XII-Central
Mindanao
3,830,500 113 56 194 878 0.3 0.1 0.5 2.3
XIII-Caraga 2,293,346 79 58 114 615 0.3 0.3 0.5 2.7
ARMM 4,120,795 76 30 130 507 0.2 0.1 0.3 1.2
Source: Philippine Health Statistics (2011) based on Department of Health
Note: This includes retained health personnel at the RHOs and devolved health personnel by LGUs.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Available human resources for health services in public sector show some stagnation
in recent years; partly due to the growing migration of trained personnel to other
countries with better labor conditions (see Figure 21). The Philippines has become
a major source of health professionals for many countries because Filipinos are
generally fuent in English and adequately skilled and trained in their feld, as well
as compassionate in nature and patient in providing health care services. The high
foreign demand for Filipino health professionals, however, led to a costly brain drain
in the countrys health sector.
Data on the government sectors work force show clear regional disparities. The
national ratios for every 10,000 inhabitants are 0.3 doctors, 0.2 nurses, 0.5 dentists
and 2.0 midwives. ARMM region shows the worst at 0.2, 0.07, 0.3 and 1.2, respectively
while CAR shows the best ratios, save for nurses, at 0.4, 0.2, 0.5 and 2.9, respectively
(see Table 16).
5b. Eligibility Conditions to Access Benefts of the National Health Insurance
Program
As shown in the previous section, the health system, through the NHIP, incorporates
different components aimed at covering various population segments. Eligibility
conditions to access PhilHealth benefts are summarized below (PhilHealth, 2012):
i. Employed Sector Program
Payment of at least three monthly premiums within six months prior to
the month of confnement
Confnement in an accredited hospital for at least 24 hours (except when
availing outpatient care and special packages) due to illness or injury
requiring hospitalization
Attending physicians must also be PhilHealth-accredited
The 45 days allowance for hospital room and board is not consumed yet
ii. Individually Paying Program
In certain confnement cases, payment of at least three monthly premiums
within the immediate six months prior to the month of confnement
For pregnancy-related cases and availability of the newborn care
package, dialysis (except those undergoing emergency dialysis service
during confnement), chemotherapy, radiotherapy and selected surgical
procedures, payment of nine monthly premium contributions within the
last 12 months is required except for those enrolled under the KASAPI
program
Confnement in an accredited hospital for at least 24 hours (except when
availing outpatient care and special packages) due to an illness or injury
requiring hospitalization
Attending physicians must also be PhilHealth-accredited
Availment is within the 45-day allowance for room and board
65 CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS
iii. Sponsored Program
The validity period of each benefciary is stated in his/her PhilHealth
card
The 45 days allowance for room and board of the member or the separate
45 days allowance shared among dependents are not consumed yet
Admitted in an accredited hospital and attended to by accredited
physicians
Confnement of at least 24 hours (except when availing outpatient care
and special packages) due to an illness or injury requiring hospitalization
iv. Overseas Filipino Workers
Availment must be within the validity period as stated in the OFWs
PhilHealth Member Registration Form (PMRF) or in the payment receipt
The OFW-members 45 days allowance per year for hospital room and
board and the separate 45 days allowance shared among the dependents
have not been consumed yet
v. Lifetime Member Program
Must be admitted in an accredited hospital and attended to by accredited
physicians
Confnement of at least 24 hours (except when availing outpatient care and
special packages) due to an illness or disease requiring hospitalization
Availment is within the 45 days allowance for room and board
All the NHIP components cover dependent family members without any additional
cost and with no limit to their number, including spouses, children and parents older
than 60 who are not members of PhilHealth. In turn, every member of PhilHealth has
access to the same services, with the exception of some special beneft packages only
available to benefciaries of SP and OWP. In turn, the services included in the plans
are as follows:
i. In-patient coverage: Subsidies for hospital room and board fees, drugs and
medicines, X-ray and other laboratory exams, operating room and professional
fees for confnements of not less than 24 hours
ii. Outpatient coverage:
Every program: Day surgeries, dialysis and cancer treatment procedures
such as chemotherapy and radiotherapy
Sponsored program:
Special Outpatient Beneft
Package from accredited rural health units:
Preventive Care: primary consultation, blood pressure monitoring,
breast examination, rectal exam, body measurement, counseling for
the cessation of smoking, and counseling for lifestyle change
Diagnostic Services: chest X-ray, sputum microscopy, and visual
acetic acid screening for cervical cancer
Laboratory Services: fecalysis, and complete blood count
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Overseas Workers Program: Enhanced Outpatient Beneft Package
(available in the Philippines only)
Consultation
Diagnostic services: Complete blood count, routine urinalysis,
fecalysis, fasting blood sugar, blood typing, hemoglobin/hematocrit,
electrocardiogram, anti-streptolysin O (ASO-Titer), hepatitis B screening
test, treponemapallidum hemaglutination assay, potassium hydroxide,
erythrocyte sedimentation rate, pregnancy test, X-ray (skull, chest,
lower and upper extremities), sputum microscopy pap smear
Visual acuity examination
Psychological evaluation and debriefng
Promotion/preventive health services: Visual acetic acid screening for
cervical cancer, periodic digital rectal examination, Periodic clinical
breast examination, counseling for cessation on smoking, Lifestyle
modifcation (regular blood pressure measurement and nutritional or
dietary counseling), counseling for reproductive health particularly
breastfeeding, nutritional or dietary counseling
Auditory evaluation
Treatment of the following diseases based on PhilHealth-adopted
clinical practice guidelines: Urinary tract infection, upper respiratory
tract infection, acute gastroenteritis
Since September 2011, the benefciaries of the program were also given access to
a set of special packages for medical and surgical procedures that have additional
cost. PhilHealth, for instance, has started to use case rate schemes with the purpose
of making information transparent, thereby limiting the discretionary levels in the
collection from patients requiring certain services. A case rate scheme refers to the
fxed rate assigned by PhilHealth for each treated case, in all hospitals, regardless of
type and level. For health care providers, this scheme would improve effciency and
quality care, and increase accountability as case payments shall be made directly
to the hospital/health facility. The payment to the hospital/health facility already
includes the professional fees of all accredited doctors and other health professionals.
Below is a list of case rates as established by PhilHealth:
Medical Cases
Dengue I (Dengue fever, DHF grades I&II): PhP 8,000 1.
Dengue II (DHF grades III & IV): PhP 16,000 2.
Pneumonia I (moderate risk): PhP 15,000 3.
Pneumonia II (high risk): PhP 32,000 4.
Essential Hypertension: PhP 9,000 5.
Cerebral Infarction (CVA-I): PhP 28,000 6.
Cerebral Hemorrhage (CVA-II): PhP 38,000 7.
Acute Gastroenteritis (AGE): PhP 6,000 8.
Asthma: PhP 9,000 9.
Typhoid Fever: PhP 14,000 10.
Newborn Care Package in Hospitals and Lying in Clinics: PhP 1,750 11.
67 CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS
Surgical Cases
Radiotherapy: PhP 3,000 1.
Hemodialysis: PhP 4,000 2.
Maternity Care Package (MCP): PhP 8,000 3.
Normal Spontaneous Delivery (NSD) Package in Level I Hospitals: PhP 8,000 4.
NSD Package in Levels 2 to 4 Hospitals: PhP 6,500 5.
Caesarean Section: PhP 19,000 6.
Appendectomy: PhP 24,000 7.
Cholecystectomy: PhP 31,000 8.
Dilatation and Curettage: PhP 11,000 9.
Thyroidectomy: PhP 31,000 10.
Herniorrhaphy: PhP 21, 000 11.
Mastectomy: PhP 22,000 12.
Hysterectomy: PhP 30,000 13.
Cataract Surgery: PhP 16,000 14.
TB Treatment Through DOTS Package for new cases only: PhP4,000 15.
Malaria Treatment in accredited Rural Health Units: PhP 600 16.
Outpatient HIV/AIDS treatment: PhP 30,000 17.
Voluntary Surgical Contraception Procedures (Vasectomy and Tubal Ligation): 18.
PhP 4,000
The services not covered by the program are:
Fifth and subsequent normal obstetrical deliveries 1.
Non-prescription drugs and devices 2.
Alcohol abuse or dependency treatment 3.
Cosmetic surgery 4.
Optometric services 5.
Other cost-ineffective procedures as defned by PhilHealth 6.
PhilHealth combines different methodologies and mechanisms to provide benefts to
its members. Inpatient care benefts provide frst-peso coverage up to a maximum
amount which is payable to providers on a fee-for-service basis. As such, PhilHealth
pays the provider from the frst peso of the bill up to the maximum beneft allowable
while members are responsible for paying the remaining balance (United Nations,
2012). The coverage cap varies with the case type (surgical, general medicine,
maternity, pediatrics, etc.) and level of the facility (primary, secondary, tertiary).
On the other hand, fxed case payments are made for the TB-DOTS, the Maternity
package, and the SARS and Avian Infuenza package (United Nations, 2012). In
the case of the outpatient package provided to indigent members, PhilHealth uses
capitation payments (Domingo, 2012-I).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
For Sponsored Members and their dependents, since 2010 (through PhilHealth
Board Resolution 1441), the case rates and No Balance Billing (NBB) combination
guarantees access to a complete set of services without the need to shell out additional
payment over and above the case rates. Supporting the governments commitment to
reduce maternal and infant mortality rates, NBB is also applied to other benefciaries
of components of NHIP (different from SP) for the maternity care and newborn care
packages in all accredited (MCP) non-hospital providers (e.g., maternity clinics,
birthing homes). The member may also apply for reimbursements upon submission
of an offcial invoice, which is deducted from the case payment. When a sponsored
member is admitted in a private hospital, the NBB policy will not apply, unless the
private hospital voluntarily implements it.
In addition to these benefts in PhilHealth, a PhilHealth plus is currently being
planned to provide, besides the basic minimum and supplemental packages, beneft
coverage to benefciaries of contributory funds.
The goal of these schemes is to bring down out-of-pocket expenses to the lowest
possible level, which mitigates the fnancial risk of patients facing an illness not
fully covered by basic insurance. These also cover the cost of receiving care in a
private room or choice of physicians and minimize waiting time for more members.
All these supplement the benefts provided by PhilHealth. However, these schemes
may also widen inequity in the distribution of services as the highest-income sectors
will undoubtedly be those that will be able to gain access to differentiated health
services.
Additionally, on June 21, 2012, PhilHealth implemented an initial package of Z
Benefts (through PhilHealth Board Resolution 1629). These are the cases that are
at the end of the spectrum of all illnesses and interventions which are ranked from
Table 17: Benefciaries and Payment Benefts of NHIP, 2011
Benefciaries Payment Benefts
in million
PhP
%
in million
PhP
%
GOVERNMENT
EMPLOYED
5,903 7.5 5,964 17.1
PRIVATE EMPLOYED 18,097 23.1 12,222 35.0
IPP 9,905 12.6 5,826 16.7
OWP 5,085 6.5 1,222 3.5
NPP 945 1.2 2,311 6.6
SP 38,449 49.1 7,338 21.0
Total 78,386 100.0 34,884 100.0
Source: Own elaboration based on PhilHealth (2010)
69 CHAPTER 5: SUPPLY OF SERVICES AND SUFFICIENCY OF BENEFITS
A to Z based on their increasing complexity and cost. This frst group of Z Benefts
covers four conditions:
For children, a package for standard risk acute lymphoblastic leukemia: PhP 1.
210,000 for three years
For women, a package for early stage breast cancer: PhP 100,000 2.
For men, a package for low to intermediate prostate cancer: PhP 100,000 3.
Treatment of low-risk end-stage renal disease requiring kidney transplant: PhP 4.
600,000
Thus, PhilHealth has started a special coverage for the treatment of catastrophic
illnesses, which will have direct bearing on the spending of households (Padilla,
2012-I). This includes any illness that may be life or limb-threatening and will
require prolonged hospitalization, extremely expensive therapies or any other care
that would deplete fnancial resources, unless covered by special health insurance
policies. PhilHealth thus aims to provide greater coverage in the face of fnancial risk,
above all for the poorest sectors of the population. For its initial implementation, the
Z Beneft package would be provided by selected PhilHealth accredited Level 3 or
Level 4 government hospitals.
To gain access to these benefts, contributory members should pay additional fees
on top of their regular fees. PhilHealth covers 100% of the case rate for sponsored
program members and, at most, 50% for non-sponsored program members. In the
latter, premium contributions must be made for the next three years, requiring
from all members a 3-year lock-in membership prior to availment of the beneft, as
follows:
Individually Paying Program or Overseas Filipino Workers members shall pay a 1.
total amount of PhP 7,200.00 (PhP 2,400 x 3 years).
For employed members, a certifcation of approval/agreement from employer to 2.
the lock-in membership for the next three years must be submitted.
The lock-in membership does not apply to lifetime members and sponsored 3.
program members.
5c. Beneft Suffciency and Program Impact
Suffciency refers to the degree at which the benefts provided by the program are
adequate to meet the needs of different benefciaries regardless of their economic
situation. There are no appropriate indicators to measure suffciency of benefts
accurately. However, these benefts encompass various health services not usually
used simultaneously by the same person hence it is possible to have an approximate
assessment based on the fnancial protection provided by the program for specifc
services.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
The average fnancial protection, the share of the total cost covered by PhilHealth,
shows that 88% of the hospital bill is covered by the program in public facilities, while
53% of the bill is covered in private hospitals. However, such fgures do not include
payments made outside of the hospital. In a study which sampled 937 hospitalized
children under the age of six, it was estimated that their average fnancial protection
was limited to 53% (Bodart and Jowett, 2005).
Manasan offers some pertinent data on the subject. In 2004, PhilHealths estimated
share of benefts for hospitalization averaged 62%, but according to the same
author, the actual share might be lower (Manasan, 2009). A patient exit survey
taken at public hospitals in the Visayas in 2005 reported that PhilHealths share
for the hospitalization of children under six was 71%, lower than the 88% based
on PhilHealths own estimate. Furthermore, the hospital bill accounted for 72% of
total medical expenses, with the remaining 28% going to purchases of drugs and
medicines outside of the hospital. This implies that PhilHealths share based on the
total medical expenses was only around 51% (71% of 72%).
The same author explores three potential explanatory causes of the insuffciency of
NHIP benefts: a) the frst peso coverage up to a cap approach in the provision of
benefts, b) paying providers on the basis of fee-for-service, and c) the absence of
regulations on the fees that providers charge. These causes were somewhat mollifed
due to the incorporation of PhilHealths various strategies, among which are the NBB
(described in the previous section) and the enforcement of the case rates that regulated
and made transparent the costs of the different benefts (including professional fees).
Indeed, it is possible to think that the fnancial protection provided by PhilHealth to
its members has increased in the past few years, limiting in many situations the risk
to which individuals are exposed. However, the effect derived from a limited Beneft
Delivery Ratio (BDR) should not be overlooked and should take into consideration: a)
the formal coverage of the program; b) the real possibility of gaining access to health
services from accredited providers; and c) the support value or proportion of the
health care bill covered by PhilHealth (see Chapter 6).
In fact, the structure of the benefts covered by NHIP in a minimum or basic package
imposes limits to the suffciency of such benefts to the types of care and treatments
and, in many cases, on condition that they obtain the services in government hospitals;
these limit the real fnancial protection that may be provided to its members and
their dependents.
The limited coverage of benefts explains the growing share of out-of-pocket expenses
in total health spending (see Chapter 4), which makes the health system regressive. In
addition, the high out-of-pocket spending also explains why the use of NHIP services
is low for SP members - an important barrier to accessing health care - especially for
the very poor that require hospital services.
71
CHAPTER 6: SOCIAL SOLIDARITY,
REGIONAL AND GENDER EQUITY
The Philippine health system is highly unfair, in terms of its fragmentation, population
coverage, health spending, peoples access to services, regional disparities and gender
equity.
Public health spending is very low. The total consolidated public spending of the various
levels of government barely reached 0.9% of GDP in 2007, which, as explained before,
is very little by international standards including those of neighboring countries with
the same degree of development. The level of public spending is remarkable when
compared with private spending, which accounts for 2.3% of the GDP.
The combination of low public health spending and high private spending is the
most worrisome inequality aspect of a system rather far from complying with the
objective of developing an insurance of universal coverage. High private spending
means that the poorest households will depend on the expansion and real scope of
the subsidized coverage programs and these, being limited create serious diffculties
to reach universal coverage and include the poorest households.
As stated in a recent report of the World Health Organization, its member countries
have committed to develop their health fnancing systems so that everyone has
access to services without facing fnancial diffculties to pay for them. This objective
was defned as universal coverage (WHO, 2010). In order to reach universal
coverage, countries face three interrelated fundamental problems: a) the availability
of resources, b) the excessive dependence on direct payments when people need
assistance, and c) the ineffcient and non-equitable use of the resources.
Many countries, like the Philippines, have decided to provide their populations with
universal access to health services but few have made clear and explicit how to
reach that goal and what specifc level of coverage should be reached. Universal
coverage implies something much more ambitious than some coverage for each
citizen. It means ensuring homogeneous and suffcient coverage levels for every
citizen, fnanced by fscal resources.
We have already demonstrated three important issues: a) at least one-fourth of the
population in the Philippines is not covered by PhilHealth; b) this is largely due
to insuffcient fscal resources that impede reaching the target coverage; c) the
fragmentation of the health system results in lack of equity; and d) all of the above
are closely linked to the fnancing methodology.
Three types of fragmentation in the fnancing of health systems affect the equity in
access to services. First, the problems resulting from the high levels of out-of-pocket
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
health spending limit the access to health services of those people who require them
the most. Second, fragmentation also results from differences between those who have
formal social security coverage and those in the informal sector of the economy who
have lesser protection through social assistance or subsidized coverage. Third, there
is also territorial fragmentation induced from the existence of health systems at a
subnational level with differing coverage depending on the socio-economic conditions
of each place; hence, inhabitants of the same country endure diverse levels of public
sector coverage due to their residence or location.
In this chapter, four aspects of the fragmented health system of the Philippines
regarding equity will be approached: a) coverage problems in an unequal society;
b) additional imbalances that demand a decentralization process in an unevenly
developed territory; c) access barriers to the different PhiHealth programs, and fnally,
d) gender-related equity problems.
6a. Health Coverage in an Unequal Society
It is impossible to evaluate health equity independently from the general inequality
in distribution. Relative to neighboring countries, the Philippines has a high
concentration of population in a limited land space (i.e., the population density is
second after the state-city of Singapore), has a high proportion of urban population,
Table 18: Basic Indicators of Philippines Neighbor Countries, 2007
Country Population
Population
density
Urban
population
Adult
literacy
Life
expectancy
Infant
mortality
(millions)
(people per
km)
(% of total
population)
rate (%)
both sexes
(years)
rate
(deaths
per 1,000
livebirths)
Brunei 0.4 66 72 95 76 6
Singapore 5.0 7 100 94 81 2
Malaysia 28.3 86 68 92 72 5
Thailand 67.8 132 36 94 70 9
Philippines 92.2 307 63 93 71 21
Indonesia 243.3 128 43 92 68 30
Vietnam 87.3 263 28 90 72 11
Laos 6.3 27 27 73 61 49
Cambodia 14.8 82 15 76 61 50
Myanmar 50.0 74 31 90 56 42
Source: Chongsuvivatwong, et al. (2011)
73 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
and has intermediate social indicators (see Table 18). In particular, the Philippines
has high and steady inequality in income distribution: the Gini coeffcient index
improved very little in the past decade (from 0.49 in the mid-1990s to 0.44 in recent
years) and is substantially higher than that in other neighboring countries with the
same level of development like Vietnam (0.38), Laos (0.37) and Indonesia (0.37) (UNDP
webpage, October 2012; Racelis and Cabegin, 2001).
The enrolment to PhilHealth evolution was presented in Chapter 2. In 2011, the
coverage (enrolment) reached 82% of total population. Unfortunately, effective coverage,
meaning to be eligible for the benefts, according to data from the 2008 National
Demographic and Health Survey (NDHS) is quite lower than that. Table 19 presents
this information, based on a survey of health insurance coverage at the individual level,
which shows the inequality in coverage. The percentage of the population with any
health insurance (42%) includes people with coverage ranging from 21% in the poorest
quintile to over 65% in the richest. This is largely explained by PhilHealth coverage,
amounting to 37% of the total population. This coverage is not compensatory, as it
Table 19: Health Insurance by Income Quintile, 2008 (%)
Quintile
Number of
insurance
Any
insurance
PhilHealth
Private
insurance
1. Lowest 79.1 20.9 19.6 0.2
2. Second 68.9 31.1 28.6 0.3
3. Middle 60.2 39.8 35.3 1.1
4. Fourth 46.0 54.0 48.2 2.0
5. Highest 34.7 65.3 57.0 7.0
TOTAL 57.8 42.0 37.7 2.1
Source: NSO (2009)
Table 20: Distribution of Health Spending by Quintile and
Payer (% of total spending), 2003
Expenditure Poorest 2 3 4 Richest
Out of pocket 2.67 6.34 10.68 20.37 59.93
PhilHealth 11.29 7.26 13.71 25.81 41.94
Local
Government
19.25 21.34 21.76 20.50 17.15
National
Government
16.45 19.91 22.08 21.65 19.91
Source: NSO (2009)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
goes from 20% in the poorest quintile
to 57% in the richest (Orbeta, 2008).
The share of private insurance is
very low with an even higher pattern
of inequality. The population without
insurance is highly concentrated in
the lowest three quintiles (79% in the
poorest) whereas it decreases to less
than 35% in the richest quintile.
However, despite the better
PhilHealth coverage in all the
population quintiles, PhilHealth
spending was, in 2007, similar to
that of private insurance companies
and HMOs (0.3% of GDP), as shown
in Table 12.
Data on the quintile distribution
of each type of health spending
confrms the usual assumption
about the concentration of the out-
of-pocket spending in the richest
strata of the society. This trend is
replicated, albeit to a lower degree,
by PhilHealth spending. However,
the weight of out-of-pocket health
spending in the total spending of the
poorest households is usually higher
showing the regression of this type
of spending in health fnancing. Instead, national and local public spending has
an almost proportional distribution, with higher relative concentration in middle-
income quintiles.
Table 21: Poverty Incidence in Total Population by
Region, 1991, 2003, 2006 and 2009 (%)
1991 2003 2006 2009
NCR 7.6 3.2 5.4 4.0
ARMM 21.5 31.4 42.8 45.9
CAR 37.3 21.7 23.0 22.9
CARAGA 45.0 44.7 44.0 47.8
Region I 34.6 22.8 26.6 23.3
Region II 30.6 19.6 20.0 18.8
Region III 21.8 12.4 15.2 15.3
Region IV-A 24.8 12.1 12.3 13.9
Region IV-B 43.8 37.5 42.2 35.0
Region V 54.6 45.8 45.2 45.1
Region VI 42.1 30.6 28.6 31.2
Region VII 42.4 37.2 38.8 35.5
Region VIII 45.1 37.6 39.0 41.4
Region IX 35.8 45.7 39.8 43.1
Region X 45.3 38.8 39.7 39.6
Region XI 39.3 31.0 31.7 31.3
Region XII 50.4 33.1 33.1 35.7
Average 33.1 24.9 26.4 26.5
Source: Mesa-Lago, et al. (2011)
0.63
0.57
0.54 0.53
0.48
0.1
0.13
0.14
0.14
0.15
0.18
0.19
0.19
0.19
0.24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1997 2000 2003 2006 2009
Poorest Quintile
0.49
0.46
0.48
0.45 0.44
0.21 0.27 0.23
0.21
0.2
0.23
0.2
0.22
0.26
0.23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1997 2000 2003 2006 2009
Richest Quintile
Other
Medical charges
Hospital room charges
Drugs and medicine
Figure 22: Distribution of Out-of-Pocket Health Expenditure by Components, 1997-2009
Source: Herrin and Lavado (2011)
75 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
The high share of private and out-of-pocket expenses in total health spending clearly
plays a strong role in inequality as it leaves a wide range of population groups
fnancially unprotected (Universal Health Care Group, 2012-I). This is the reason
why the comparison between the evolution of the out-of-pocket structure for the
poorest and richest quintiles is revealing. Figure 22 shows signifcant differences in
the structures of both quintiles: in both, the higher share of out-of-pocket spending is
on drugs and medicine, although its importance decreased after 1997. Also, in both
quintiles, spending on hospital room and medical charges are second in importance.
Both for the poorest and for the richest quintiles, these three types of spending
account for 87% of the total.
Regarding the access to health services, there are marked differences between the
poor and the affuent when health care utilization patterns are examined. Poor
families, especially in rural areas, rely heavily on public services, while non-poor
families tend to use private facilities (Solon et al., 2003). In terms of coverage, on
the other hand, there is a 14% coverage difference between urban and rural areas.
According to NDHS, 50.7% of the urban population lacks health insurance while
such percentage goes up to 64.9% in rural areas (NSO, 2009). Overall, fnancing for
health is regressive in the Philippines. A signifcant part of the scarce benefts offered
by the public sector is received by the sectors least in need. On the other hand, direct
payments are high and deepen the inequality of the system.
Table 22: Health Insurance Coverage by Region and Provider, 2008
Region
No
Insurance
Any
Insurance
Phil
Health
Private
Insurance,
HMO, etc.
Other
Dont
know/
missing
NCR 48.4 51.3 43.0 5.4 0.5 0.3
CAR 54.3 45.3 42.3 1.1 0.4 0.5
Region I 54.7 45.2 40.8 1.1 0.1 0.2
Region II 62.2 37.7 35.4 1.1 0.6 0.1
Region III 63.3 36.5 32.3 1.5 0.2 0.3
Region IVA 52.3 47.6 43.4 2.2 0.5 0.1
Region IVB 73.3 26.1 20.8 1.1 0.9 0.5
Region V 61.0 38.7 34.5 0.6 1.8 0.2
Region VI 58.1 41.3 36.3 2.2 0.3 0.6
Region VII 55.8 43.6 39.2 2.2 0.5 0.6
Region VIII 72.2 27.6 26.1 0.6 0.5 0.2
Region IX 70.7 29.2 25.8 1.6 0.3 0.1
Region X 32.2 67.5 66.0 1.6 0.1 0.3
Region XI 60.8 38.8 36.1 2.4 0.5 0.4
Region XII 59.0 40.6 38.4 1.2 0.3 0.4
Region XIII 51.8 48.1 46.4 0.8 0.3 0.0
ARMM 82.3 17.5 17.1 0.4 0.1 0.2
Source: NDHS (2008) and NSO (2009)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
6b. Decentralization and Territorial Equity
Differences between rural and urban poverty incidence and inequality among regions
are signifcant. The individual poverty incidence among fshermen and farmers is
well above the national average (50% and 44%, respectively, in 2009) and also higher
in rural over urban areas (74.8% and 25.2%). It is hypothesized that the regions with
the lowest poverty incidence have the highest social security coverage because they
also have the smallest proportions of informal and rural labor; the opposite is true of
regions with the highest poverty (Mesa-Lago et al., 2011).
In addition, there are territorial inequalities on access to health services within the
Philippines (Universal Health Care Group, 2012-I), where poverty incidence ranges
from 4% of the population in NCR to above 45% in ARMM, CARAGA, and Bicol.
Although national poverty incidence declined in 1991 to 2009, it increased in ARMM
and CARAGA (see Table 11 and Appendix Table 1). Under these circumstances, the
decentralization process can be an obstacle to equity improvement policies.
Besides the signifcant unequal income distribution, there is also an unfair
distribution of health spending across quintiles of the population that fails to exert
a compensatory function. Additionally, health insurance coverage is also uneven
among regions, reaching 67.5% in Northern Mindanao and 17.5% in ARMM (see
Table 22). This region, as noted, before has the worst social indicators among the
different regions in the country. Also, coverage is lower in rural areas (35%) than in
urban ones (50%) (National Statistics Offce, 2009). The worst coverage indicators
are in regions with the worst economic-social development as will be shown later
(Domingo, 2012-I).
There is also an unfair distribution of public spending among regions (although
there is no comparative data on spending in the LGUs in the regions), as well as of
different facilities and skilled labor (see Chapter 5). Thus, health coverage, access
to services and spending reproduce or even worsen the inequality of the productive
system, veering away from a universal, fair and equal coverage. This is undoubtedly
related to the health systems structure, the level of decentralization, the availability
of resources and the mechanisms of distribution of such resources.
With the devolution of health services from the central government to local governments
since 1991, the provision of direct health services, particularly at the primary and
secondary levels, is the mandate of LGUs. Provincial and district hospitals are under
the provincial government while the municipal government manages the RHUs and
BHS. In every province, city or municipality, there is a local health board chaired by
the local chief executive that serves as an advisory body on health-related matters to
the local executive and the sanggunian or local legislative council (DOH, 2005).The
DOH has a feld offce in every region of the country and operates specialty hospitals,
regional hospitals and medical centers, as well as provincial health teams made
up of DOH representatives from the local health boards and personnel involved in
communicable disease control.
77 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
The transfer of health service management and several other functions was
accompanied by national government fnancial transfers to LGUs: the Internal
Revenue Allotment (IRA). However, the IRA was allocated independently of need and
capacity to raise local revenues and no portion of the IRA was earmarked for health
service provision. With lacking commitment and a limited budget to draw from, many
LGUs underfund health care. This threatens the supply of drugs, services, and FP
products in RHUs and BHS, and leads to the under-provision of care and to the
increase of informal fees charged by providers (Mason, Racelis, and Russo, 2002).
Throughout the past two decades, there has been a deep and unfnished debate on
the benefts and diffculties of decentralization. Solon, et al. (2003) evaluated the
fnancing and development of provincial hospitals after the decentralization process,
and pointed out that in general, the LGUs are unable to maintain pre-devolution
expenditure levels. Reduced spending has had an impact on hospital maintenance
and other operating expenses. The lack of supplies, drugs and allowances for repair
and maintenance of medical equipment had severely impaired service delivery even if
the necessary medical personnel were available. On the other hand, Guevara (2012)
claims that decentralization has produced very outstanding local executives and
local government offcials.
BOX 2: The decentralization in the fscal federalism theory
There is consensus among the leading specialists in fscal federalism about the overriding importance
of political factors in decentralization matters (Musgrave and Musgrave 1993; Ahmad, et al., 1997; Bird,
2000). The advantages and disadvantages of greater decentralization both in the provision and fnancing
of public spending on social goods have been analyzed by the literature in the feld of the theory of fscal
federalism. According to this theory, the provision of local public services allows subnational governments
or administrations to better capture the preferences and needs of the residents of each area, while, on
the other hand, the centralized provision implies a more uniform service (Oates, 1977).
The literature also recognizes the need for a certain degree of centralization in the provision, given
the externalities, benefts of scale and imperfect mobility of people. These factors prevent many times
matching the supply of the service with local preferences. That is why it is accepted that there are certain
functions better managed by the central government, and among them are redistributive policies. The
ability to improve the distribution of income at local level is severely limited by the mobility of economic
units. In this case, greater decentralization involves a restriction in the policies to assist the poor (Brown
and Oates, 1987).
The decentralization of expenditure may not match the resources. In general, what usually prevails is
the greater concentration of tax revenues in the hands of the central level and, therefore, subnational
governments depend fnancially on the central government, giving rise to different systems of
intergovernmental transfers.
Source: PhilHealth (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Diokno (2012: 9) states that the share of local budgets devoted to devolved functions
has declined, due to creeping re-centralization of health and social welfare functions,
increasing substitution of centrally controlled funds for local funds, and misplaced
priorities on the part of local authorities. The missing link in ensuring better delivery
of devolved services is the weak process of accountability. The electoral process failed
to hold local authorities accountable for their fscal behavior.
Thus, from diverse viewpoints, great expectations were placed on decentralization
to strengthen development, make democratic processes more dynamic, improve
equity and effciency of public spending, and limit the unchecked growth of public
spending. Yet, signifcant part of the debates lacked a clear and feasible recipe for
achieving goals under different situations. Unfortunately, such expectations have
been much higher than the possibilities of the decentralization processes, as shown
in the specialized literature. Box 2 summarizes the main contributions of the fscal
federalism theory regarding the advantages and disadvantages of decentralization.
The challenge is to achieve a weighted position that takes into account the particular
conditions of each case trying to fnd pragmatic responses to encourage the search
for solutions to improve the state provision of goods and services in order to maximize
the welfare of citizens. For that purpose, it is essential to consider the degree of
regional productive disparities within the country since they impose serious limits
to the operation and fnancing of decentralized services and especially when their
provision affects equity, as in the case of health. If it is assumed that the merits
of decentralization depend on the commitment of the inhabitants of each territory
Table 23: Amendments of IRA Criteria and Allocation
by LGU with Decentralization Process, 1991
Before 1991 After 1991
IRA Criteria
1. Size 20% of all internal taxes 40% of all internal taxes
2. Predictability Discretionary Mandatory
3. Determinants Population, land area, equal sharing
IRA Allocation by LGU
1. By type of LGU
Provinces: 27%
Cities: 22%
Municipalities:41%
Barangays:10%
Provinces: 23%
Cities: 23%
Municipalities:34%
Barangays:20%
2. By economic attributes
Population:70%
Land area: 20%
Equal sharing: 10%
Population:50%
Land area: 25%
Equal sharing: 25%
Source: Diokno (2012)
79 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
in the fnancing of decentralized public services to the payment of taxes (fscal
correspondence), the existence of strong regional productive disparities implies the
infeasibility of decentralization. For others, however, it implies that the results of
these reforms will depend on the accompanying system of fnancial transfers and the
strong role to be played by central governments. Nevertheless, disparities do not affect
exclusively fnancial resources. It has to be taken into account the problems derived
from the different availability of human resources and, in general, the management
capabilities across jurisdictions.
In particular, it is crucial to recognize that when these problems exist, the basic
dilemma of decentralization of social policies is to fnd a formula of compatibility
between the specifc aims of the policy of decentralization and income redistribution.
This requires mechanisms for coordination and cooperation between the various
levels of government, as well as their funding (Esguerra, 2012-I; Patino, 2012-I). In
a country like the Philippines, which is composed of very unequal territories, the
search for universal and equitable coverage demands a reinforcement of the role of the
central government to compensate for differences and coordinate sector policies that
have a common axis, although it may have different degrees of decentralization.
The evaluation of the decentralization process in cases like the Philippines must
consider systems of funds transfers between levels of government. Diokno (2012)
explains the main changes in the funds transfer schemes (see Table 23).
In situations where local fscal capacity is defcient or tax externalities exist, the
Intergovernmental Fiscal transfers are broadly responsive to fx these problems
(Capuno, 2012). As a result of changes in the IRA, the proceeds of the shares from
national taxes make up two thirds of the total resources of the LGUs. The limited
resources of the LGUs come mainly from the Real Property Tax and Business Tax,
both directly proportional to wealth and economic activity in each territory (see Figure
23). Thus, the less developed areas will have greater diffculty getting resources to
improve health care and other decentralized services.
10.5
10.8
1.3
9.5
63.8
2.3 2.0
Real property tax
Business tax
Other local taxes
Nontax revenues
IRA
Other shares from
national taxes
Figure 23: Distribution of Total Tax Revenue in all LGUs, 2009
Source: Own elaboration based on Llanto (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
There is the perception that after two decades of decentralization of health services,
the LGUs have not demonstrated the needed ability to improve their management
(Picazo, 2012-I), which poses the challenge of improving the policies of the central
government to compensate for differences (Esguerra, 2012-I; Universal Health Care
Group, 2012-I). Several authors note that well-managed LGUs are the exception
rather than the rule (Capuno, 2012; Diokno, 2012).
In countries with important internal development differences, as in the Philippines,
the most complex problems facing decentralized systems of public provision of social
expenditure are the outcome of lack of resources, poor management, and ineffcient
allocation of expenditure, especially in the less developed regions. In such cases, it
is necessary to search for new ways of transferring resources to compensate for the
differences between regions, as well as of incorporating incentives for expenditure
allocation in the direction required to improve service provision to the poor. An
Human Development
Index (2000)
GINI Coefficient ratio
(2009)
GDP PC
Poverty % (2009) *1
Public hospital beds
per 100.000 pop *2
Infant Mortality Rate
(2008)
High Poverty regions Philippines
Human
Development
Index (2000)
GINI Coefficient
ratio (2009)
GDP PC
Poverty % (2009)
*1
Public hospital
beds per
100.000 pop *2
Infant Mortality
Rate (2008)
Low Poverty regions Philippines
Human Development
Index (2000)
GINI Coefficient ratio
(2009)
GDP PC
Poverty % (2009) *1
Public hospital beds
per 100.000 pop *2
Infant Mortality Rate
(2008)
NCR Philippines
Human
Development
Index (2000)
GINI Coefficient
ratio (2009)
GDP PC
Poverty % (2009)
*1
Public hospital
beds per 100.000
pop *2
Infant Mortality
Rate (2008)
ARMM Philippines
Figure 24: Region Groups
Source: Own elaboration based on National Statistics Offce, (2011)
Notes: The maximum value of the each variable equals 100. Human development index: The regions values are simple averages of
the provinces. As Regions IVA and IVB are not discriminated by this index, they have the same value. *1 refers to the incidence among
population. *2 corresponds to all the licensed government hospitals in 2010.
81 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
alternative in this sense is the introduction of performance-based grants as positive
incentives to local effort to improve governance and local revenue mobilization, as
well as matching grants to equalize fscal capacities of local governments (Llanto,
2012). While there are mechanisms being gradually incorporated in order to improve
resource allocation and equity in decentralized systems, problems that may arise with
the eventual loss of resources in jurisdictions that are less effcient cannot be ignored,
as they will induce further loss of equity to the detriment of those jurisdictions,
presumably less able.
6c. The Actual Coverage Problems in the Different Programs
Whatever the approach adopted in the reforms to improve the situation of the
population in the regions, the strategy must take into account the characteristics
and scope of each PhilHealth program, as well as the special circumstances
prevailing in each region. In order to illustrate the problem, a frst classifcation of
regions has been attempted, combining development indicators (both economic and
social), poverty, inequality, hospital facilities, and infant mortality rate. Two extreme
situations must be distinguished: NCR and ARMM have, respectively, the best and
the worst indicators of each dimension analyzed and are far removed from the rest
of the country. Additionally, regions that have above-average poverty indicators were
differentiated from the others. Figure 24 shows these dimensions for these four
groups of regions, illustrating the great diversity of cases in the Philippines. These
groups are: NCR, ARMM, other regions with low poverty indicators than the average
and other regions with higher poverty indicators than the average.
Extending effective coverage of population sectors most in need will not be solved by
giving them a card and recording them as population covered (Banzon, 2012-I). It is
also necessary to facilitate effective access to health services. (Chapter 5 analyzed the
benefts accessible to benefciaries in each PhilHealth program) (Esguerra, 2012-I).
Table 24: Beneft Delivery Ratio by Selected Regions, (%)
Region Coverage Rate
Availment
Rate
Support
Value
BDR
Cagayan Valley 48.0 10.4 77.6 1.9
Central Luzon 54.0 24.0 28.5 3.7
MIMAROPA 36.0 25.5 31.9 2.9
Eastern Visayas 37.6 71.8 31.6 8.5
Zamboanga 36.3 91.1 40.2 13.3
Northern
Mindanao
73.9 51.3 41.8 15.8
SOCSARGEN 35.2 91.5 37.1 11.9
NCR 77.0 32.9 21.2 5.4
ARMM 13.6 87.0 37.2 4.4
Source: IPD (2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
However, the introduction in 2011 of No Balance Billing policy for sponsored
households is expected to have a strong redistributive impact, because the poorest
population suffered restrictions in the access to hospitals through co-payments and
frst-peso coverage. Additionally, government hospitals geared to serve the poor have
a large non-poor clientele who resort to those hospitals because of the high cost of
private facilities and the low social health insurance reimbursement compared to
actual costs. In general, lack of information combined with concerns about costs
deters the poor from using health services (WHO, 2011; Capuno, 2012-I; Nemenzo,
2012-I; Nyunt-U, 2012-I; Rosadia, 2012-I; Solon, 2012-I; ) (see Chapter 5).
In fact, the NDHS 2008 shows that there is a signifcant disparity in the use of
health services. The skilled birth attendance in the highest income quintile is 94%
as compared with the 25% lowest quintile. Only 13% of all births in the lowest
quintile occur at the facility level compared with the 84% in the highest quintile. The
immunization coverage is only 70% in the lowest quintile vis-a-vis 84% in the highest
quintile (World Bank, 2011).
The Institute for Popular Democracy (IPD, 2011) classifes the different restrictions
in the use of health services. These are as follows:
Supply-side barriers:
Limited and uneven number of accredited facilities 1.
Inaccessible health facilities and constraints on distance and related 2.
transportation costs
Inadequate supply of medicines in RHUs 3.
Lack or ineffective social marketing strategy 4.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1995 2001 2003
Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Viet Nam
Bangladesh
China a
China, Hong Kong SAR
Republic of Korea
Philippines
Figure 25: Literacy Rate Gender Gap in Asian Countries, 1995, 2001
and 2003
Source: United Nations (2008)
Note: China does not include those in the Hong Kong Special Administrative Region (SAR),
Macao Special Administrative Region (Macao SAR) and Taiwan Province of China.
83 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
Demand-side barriers:
Lack of fnancial resources to purchase medicines, pay for additional provider 1.
fees
Lack of information on benefts, availment process 2.
Lack of resources to visit health facilities (transportation costs due to distance) 3.
Perception of poor quality of healthcare services. 4.
As a result of these barriers, there is a wide gap between the high percentage of
the population covered by PhilHealth and the low share of its expenditures in total
spending. This signifes a sign of the necessary reforms to achieve actual universal
health coverage. As a result of this problem, the UP Team, led by Orville Solon,
developed the concept of Beneft Delivery Ratio (BDR) that aims to refect the
weaknesses of the health delivery chain in each of the regions of Philippines (IPD,
2011).
The BDR is the percentage of the real spending faced by PhilHealth over the total
spending required to provide universal health coverage. In practice, it is the result of
multiplying the coverage rate (number of households enrolled in PhilHealth divided
by the total number of households), the availment rate (number of households that
avail themselves of health services divided by total number of households enrolled in
PhilHealth) and the support value (the share of the total cost faced by PhilHealth).
The estimates of these rates calculated by the IPD (2011) for a set of regions highlight
the low effective coverage and confrm the signifcant regional disparities that exist
in the country (see Table 24). PhilHealth authorities are using these estimates as an
indicator to monitor the diffculties and improvements in coverage.
Table 25: Percentage of Household Population with Specifc Health Insurance Coverage and
PhilHealth Insurance Coverage, by sex, 2008
Health insurance coverage
No
insur-
ance
Any
insur-
ance
Phil
Health
GSIS SSS
Private
insurance/
HMO, etc.
Other
Dont
know/
missing
Number
Male 57.7 42.0 37.4 1.6 13.0 2.2 0.5 0.3 30.335
Female 57.8 41.9 38.1 1.9 9.6 2.0 0.4 0.3 29.282
PhilHealth insurance coverage
Paying Indigent Number
Total Member
Depen-
dent
Total Member Dependent
Male 77.4 34.4 43.0 22.7 8.5 14.3 11.345
Female 78.8 24.4 54.4 21.4 3.6 17.8 11.157
Source: NDHS of 2008 from NSO (2009)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
6d. Gender Equality in the Philippines
Gender equality in the Philippines is fairly good relative to other countries in the
region. According to NDHS (2008), Filipino women have an equivalent and sometimes
even better level or status than men. The key explanatory factors are free primary and
secondary education in public schools; and a culture that propels women towards
education, therefore resulting in women having a better education and being more
literate than men (NSO, 2009).
Figure 25 shows the evolution of the difference in the literacy rate between men
and women from 1995 to 2003. The position of the curve shows that the lower the
difference, the lower is the gap between men and women; hence, it shows higher
gender equity in literacy. In the three years shown in the Figure, the Philippines had
the lowest difference among the dozen included countries and had a declining gap.
Another international indicator that compares gender equality shows that Philippines
is among the most egalitarian countries in the world. The Global Gender Gap Index
of 2008, developed by the World Economic Forum in 130 countries, ranks the
Philippines in 6th place after Norway, Finland, Sweden, Iceland and New Zealand,
among a total of 130 sampled countries (World Economic Forum, 2008).
Furthermore, the Philippine government is committed to improve the socio-economic
conditions of women. One of the important steps is the Magna Carta of Women, signed
into law by the President in 2009. The Magna Carta is a Republic Act that prohibits
discrimination against women by recognizing, promoting, and protecting their rights.
The RA includes Filipino women working abroad through the designation of a gender
focal point in the different Philippine embassies or consulates (NDHS 2008 from
NSO, 2009).
Concerning gender equality in health coverage of the population, Table 25 shows the
percentage of household population with specifc health insurance coverage and of all
persons covered by PhilHealth insurance, as well as the percentages of those paying
for coverage and those that are indigent. These are all classifed by members and
dependents, and then further by sex. The table shows that there are no signifcant
differences between men and women. The only rate that is higher among women is
the dependent status of the PhilHealth coverage. This is due to the higher proportion
of men who are employed and calls the attention on labor market discrimination.
Despite these important and positive advances, there are still some worrisome gender
inequalities that need to be addressed. According to the Civil Society Resource
Institute (CSRI) these are persistent feminization of poverty, exploitation of women
as cheap labor and victims of international traffcking, marginalization of Filipino
indigenous women, discrimination of Moro women in a male-dominated culture
and discrimination of Muslim women in a largely Christian population (Civil Society
Resource Institute, 2011).
85 CHAPTER 6: SOCIAL SOLIDARITY, REGIONAL AND GENDER EQUITY
The cited document also highlights that the maternal mortality rate is alarmingly
high, with more than four thousand mothers dying from pregnancy and childbirth
every year; that reproductive health services are still unreliable and sometimes not
even available; that there is no comprehensive policy or program addressing womens
reproductive health rights, and that there is also a need for widely available care
(Claudio, 2012-I), including reproductive health (see footnote 2 in Chapter 1 of this
document). Emergency obstetric and newborn care facilities are not enough and not
utilized by the poorest women. The Philippines has made signifcant advances on
violence against women, addressing such problem and giving justice to their victims.
The government agencies have turned into task forces for their implementation,
but they claim that enforcement remains a problem. This situation may be causing
diffculties on focusing policies on groups at risk.
A UNICEF document highlights the good gender situation of the Philippines relative to
its neighboring countries, but stresses the importance of various reforms to address
gender issues on health. The proposed reforms include legal and political changes,
such as the decentralization of specifc international policies like the adoption of
the International Labour Organization Convention 183 on maternity protection. It
proposes a progressive increase in the national health and nutrition budget to achieve
the WHO recommended level of at least 5% of GDP. Concerning health services,
the document asks for the supply of sexual and reproductive health services, the
expansion of coverage in supplemental feeding to high risk pregnant and lactating
mothers, the provision of universal maternal-child health packages to poor and
marginalized women and children, the scaling up interventions for HIV and AIDS,
and the giving of antiretroviral drugs for prevention of mother to child transmission
of HIV (cited by ADB, 2008).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
CHAPTER 7: FINANCIAL/ACTUARIAL
SUSTAINABILITY
7a. The Financial Flow of the Health System
As already mentioned, the organization and fnancing of the Philippines health
system is the result of different types of changes implemented over the years. Figure
26 (taken from DOH) shows the complexity of the sectors fnancing. With this, it
shows the effect of the decentralization process through the sharing of resources
from the national government to the local governments and the share of the latter in
the provision of services.
The Philippines health system is funded from a mix of sources including payroll
contributions from both employees and employers in the formal sector of the economy;
payment of premiums from the self-employed, informal workers and OFWs; general
fscal revenues that fnance health insurance for the poor (sponsored program) public
facilities and public programs, as presented in Chapter 4 of this document.
Both the NHIP in general terms and the SP component in particular are fnanced
with the following resources:
The Excise Tax Law (RA 7654 of 1993) assigns 25% of the increase in the total
revenue from the excise taxes to the NHIP.
The Documentary Stamp Tax Law (RA 7660 of 1993) allocates 25% of the
incremental revenue from the increase in documentary stamp taxes to the NHIP
since 1996.
The Bases Conversion and Development Act (RA 7917 of 1995) allocates 3% of
the proceeds of the sale of Metropolitan Manila Military camps to the NHIP.
The Sin Tax Law revenues.
The Reformed Value-Added Tax Law (RA 9337 of 2005) allocates 10% of the
LGU share from the incremental revenue of the value-added tax to the health
insurance premiums of enrolled indigents.
Until 2012, the Sin Tax Law (RA 9334 of 2004) allocated 2.5% of the incremental
revenue from the excise tax on alcohol and tobacco to the programs of prevention of
diseases of DOH; 2.5% of such incremental revenue covered the indigent households
of the NHIP. Since 2013, the new Sin Tax Law (R.A. No. 10351 An Act Restructuring
the Excise Tax on Alcohol and Tobacco Products) has determined a gradual increase
in tax rates until 2017. Eighty fve percent (85%) of the incremental revenues will be
allocated to health care spending in the following way: eighty percent (80%) will be
allocated to the universal health care under the National Health Insurance Program
and twenty percent (20%) nationwide for medical assistance and health enhancement
facilities program. According to offcial estimates, during 2013 the additional revenues
to be allocated to the health sector could reach 0.24% of GDP, equivalent to 20% of
public and social security expenditures on health.
87 CHAPTER 7: FINANCIAL / ACTUARIAL SUSTAINABILITY
At the LGU level, fnancing is fragmented across provinces, municipalities and cities,
with each LGU fnancing its own facilities (Padilla, 2012-I). The LGUs receive: a)
part of the taxes from the national government; b) the internal revenue allotment
(IRA) based on a formula (consisting of three variables: land area, population, and
revenues generated such as, local taxes); and c) other revenues of the LGUs allocated
to the sector such as PhilHealth capitation and reimbursements and grants from
external sources.
The confuence of various sources reveals a signifcant fragmentation in the
fnancing of the health system. Benefciaries confront out-of-pocket payments for
fees, copayments and drugs, whereas the highest-income households pay voluntary
premiums to access private health coverage from HMOs.
The PhilHealth benefts covered the provision of inpatient and outpatient care,
emergency and transfer services, special packages targeted to specifc groups such
as mothers and children, and patients suffering from TB (maternity and newborn
care package and TB package) (see Chapter 5 of this document). In the private sector,
there are different defned-beneft packages varying according to the premium paid.
Finally, out-of-pocket spending covers a variety of expenses, characterized by being
un-pooled. As discussed in Chapter 4 of this document, out-of-pocket represents the
largest share of health spending in the country, although in principle it should be
a residual expense covering only what the government, PhilHealth and HMOs do
Figure 26: Flowchart of Health Financing in the Philippines
Source: DOH (2010)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
not cover. The magnitude of this expense is tantamount to the rate of households
un-insurance or under-insurance or their poor utilization of the available insurance
benefts (World Bank, 2011).
7b. Payment Mechanisms
Payment mechanisms differ on the basis of the services provided. In the case of the
outpatient package services provided, the RHUs are usually free of charge; however,
the problem here is the availability of resources since shortages have been reported
and are funded through fees collected from PhilHealth capitation
13
(PhP 300 or US$
6.28). Capitation funds are not always used to provide health services and in some
cases, the LGU allocates those resources for other purposes, incorporating them as
general funds.
In the case of the special benefts packages (TB-DOTS, malaria and others), health
care providers are paid per case. The amount of the case payment varies for each
package and is set by PhilHealth. In turn, inpatient care incorporates a fee-for-service
(FFS) regime, in which public and private hospitals have the possibility to charge the
fees (balanced billing).
Regarding drug costs, the inpatient package includes the reimbursement of expenditure
on a list of drugs and medicines, up to a maximum amount established. However,
there are high out-of-pocket expenses in which 45% of them are concentrated on
drugs (see Chapters 4 and 6 of this document) (Capuno, 2012-I; Rosadia, 2012-I).
This is so, even after maximum drug retail prices were imposed by the DOH on
selected drugs in August 2009, it still resulted in a 50% reduction in prices.
In the case of human resources, payments are associated with the facilities in which
they work. Private-sector doctors receive a fee-for-service or payments pursuant
to contracts with HMOs. In the public sector, the staff receives monthly salaries
according to the Salary Standardization Law and additional reimbursements from
PhilHealth (based on the number of days a patient is hospitalized),
14
with the fnal
amount depending on factors such as basic pay and nature of assignment of workers,
among others. This payment scheme drew serious criticism because it allowed doctors
to collect discretionary fees. Thus, the effective fnancial protection of the program
was substantially reduced, affecting mostly the poorest. In order to regulate these
problems, PhilHealth sets case rates to a number of special packages of benefts
for medical and surgical procedures since 2011, establishing fxed rates for each
case, eliminating the discretionary collections and making information transparent
to patients (Padilla, 2012-I).
Additionally, as pointed out in the case of sponsored members, since 2010 there has
been No Balance Billing (NBB) which permits these benefciaries to gain access to
13 PhilHealth has started to introduce payments per family instead of per capita.
14 General practitioners charge PhP 100.00 (US$ 2.09) per day of confnement, while specialists charge an additional PhP 50.00 (US$ 1.05) per day. In the
case of surgical or medical procedures, an amount related to the procedures complexity is paid as refected by the assigned relative value unit (RVU)
regularly set forth by PhilHealth.
89 CHAPTER 7: FINANCIAL / ACTUARIAL SUSTAINABILITY
health treatments and services with no additional cost to public hospitals. In addition,
benefciaries can obtain the benefts and the reimbursements already mentioned,
wherein provided by any PhilHealth accredited provider.
7c. Pooling of Funds
The possibility of carrying
out strategies of risk pooling
depends on the management
of fnancial resources so as to
diminish unpredictable health
risks among the members of
a given group. The pooling
mechanisms enable transfers
of resources from healthy
people to sick people, from the
rich to the poor or even along
the life cycle of individuals
(between active and passive
ones). Thus, introducing risk-
pooling in the health fnancing
system is justifed in terms of
its impact on the equity and
solidarity of the system. In
the Philippines different levels of risk pooling are combined with various sources of
fnancing of the health system.
NHIP fnancing comes from different sources (see Chapter 4 of this document).
PhilHealth pools fund from all sectors of society namely: formally employed, direct
payments from LGUs, national government budget, and voluntary premiums. All
collected resources are managed as a single fund, with uniform benefts for the
members and dependents of the various components of the program. Table 26
shows the existence of cross-subsidies between benefciaries of NHIP components.
On the aggregate, in 2011, beneft payments represented a ratio of 1.05 of total
premium collections, meaning that payments were higher than premium hence
having implications in terms of sustainability of the system (see next section of this
document).
An analysis of the breakdown of the PhilHealth components shows various patterns
of use of benefts between them. The public and private employed programs show a
benefts-to-premium ratio below 1 (0.75 and 0.61 respectively) whereas in the SP and
IPP programs, the benefts paid far exceed the premium (3.11 and 2.83 respectively).
Obviously, the same occurs in lifetime members, who are not charged premium.
As opposed to the PhilHealth risk pool, private health insurance has only limited risk-
pooling capacities because of smaller groups. Additionally, HMOs have incentives to
adversely select its members, giving priority to healthier people in the pool, which
leads to the cream-skimming effect.
15

15 The cream savings from benefciaries that have lowest risks and cost- is captured by some providers that exclude those with the highest risk and
cost.
Table 26: Premium Collection versus Benefts Payments
by Insured Groups of NHIP, 2011
Premium
collection
Benefts
payments
Benefts
To
premium
ratio
Government
employees
8 6 0.75
Private employees 20 12 0.61
IPP 2 6 2.83
SP 2 7 3.11
OFW 831 1 1.47
Lifetime members 0 2
Total NHIP 33 35 1.05
Source: Own elaboration based on PhilHealth Annual Report (2010)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
7d. Operating Expenses
The NHIP is entirely administered by PhilHealth, which collects premiums, accredits
providers, determines benefts packages and provider payment mechanisms,
processes claims, and reimburses providers and benefciaries. Thus, PhilHealth
takes over responsibilities of supervision, follow-up and monitoring of the NHIP. To
this end, it has an Administration Board presided over by the Health Secretary and
backed by the President of PhilHealth with representation from other government
departments and agencies, and the private sector (see Chapter 2 of this document).
Salaries and other operating expenses are fnanced from premium collection and
revenues from the funds investment returns. Until 2012, PhilHealth can use up
to 12% of the previous years premium and 3% of the fund revenue for operating
expenses. On the basis of recent reforms to the Law, within a transition period of
fve years, there will be a formula for administrative costs (5% come from beneft
payments of last year; 5% from collection, and 5% from income/investment). After
that, these percentages will be reduced to 4%.
Table 27 estimates that the share of administrative expenditures in PhilHealths
total expenditures averaged around 11.89% in 2000-2010. In 2004 administrative
expenditures jumped into 49.7% over 2003 while beneft payments rose 18.0%,
which resulted in an increase in the administrative share to 14.43%. On the other
hand, in 2005 there was an inverse behavior with beneft payments growing 35.5%
and administrative expenditures decreased by 19.3%, dropping the share to 9.12%.
Such share peaked at 15.03% in 2008 and thereafter decreased to 11.1% in 2010.
Table 27: Operating Expenses of NHIP, 2000-2010
Year
Total
Expenditures
Beneft
payments
Administrative
expenditures
Administrative
expenses
to total
expenditures
2000 7,622 6,764 858 11.26%
2001 8,755 7,740 1,015 11.59%
2002 10,002 8,839 1,162 11.62%
2003 12,412 10,957 1,455 11.72%
2004 15,104 12,925 2,179 14.43%
2005 19,270 17,511 1,758 9.12%
2006 19,005 17,105 1,900 10.00%
2007 19,838 17,448 2,390 12.05%
2008 21,345 18,136 3,209 15.03%
2009 27,791 24,211 3,579 12.88%
2010 34,322 30,513 3,809 11.10%
Source: Philhealth Annual report (2000-2010)
91 CHAPTER 7: FINANCIAL / ACTUARIAL SUSTAINABILITY
7e. Financial/Actuarial Sustainability
Table 28 summarizes the results of the 2011 Actuarial Valuation Report performed
by the National Health Insurance Programs Offce of the Actuary, which identifes
different scenarios projected for 2010-2021 (NHIP, 2012).
A scenario of stability, maintains most system variables unchanged, albeit assuming
signifcant increase in new SP members and moderate wage rises. After the frst year
with a small surplus, NHIP total revenues are insuffcient to meet with the growing
expenditure; and the steady defcit appear to be accelerating from 2013 onwards.
The fnancial balance deteriorates from a surplus of PhP 923 million in 2010 to a
defcit of Php 40, 389 million in 2021, refecting an increase of 44.8 times in the
period. The cumulative increase in revenues for the period is 86.4% (an average of
5.42% per year) whereas the cumulative total expenses increase by 208.7% (9.44%
annually). The projected defcit assumes that benefciaries will expand by 42.1%
and the members by 65.8% in the period. At a lower rate of expansion, the defcit
would be higher, as it would be the case if wages rise at a lower rate. The actuarial
report states this was the expected effect of implementing the 23 case rates in 2011
without any corresponding change in premium structure (NHIP, 2012)
16
. Should
these projections materialize, the fund could only survive until 2018.
16 The 23 case rates refer to the rates specifed by NHIP for medical and surgical cases that guarantees access to a set of services without additional pay-
ments. For more information, see Chapter 5.
Table 28: NHIP Projections, 2011-2021 (in million PhP)
Year Membership
Collec-
tion
Inter-
est
In-
come
Other
Income
(Accre
Fees)
Total
Income
Beneft
Pay-
ment
Operat-
ing Ex-
penses
Total
Expenses
Annual
balance
Active
paying
principal
members
Total
registered
benefciaries
2010 17,225,623 70,184,683 29,088 6,251 23 35,362 30,629 3,809 34,438 924
2011 22,208,883 88,661,068 33,294 6,644 23 39,961 40,341 4,138 44,479 -4,518
2012 23,092,607 90,822,317 46,680 6,071 26 52,777 48,298 4,195 52,493 284
2013 23,660,350 91,813,569 48,300 5,893 17 54,210 54,048 5,784 59,832 -5,622
2014 24,244,303 92,822,762 49,632 5,441 14 55,087 59,834 5,973 65,807 -10,720
2015 24,854,886 93,888,803 51,034 4,702 26 55,762 65,335 6,119 71,454 -15,692
2016 25,445,236 94,831,461 52,560 3,777 17 56,354 70,062 6,265 76,327 -19,973
2017 26,050,842 95,789,484 54,418 2,414 14 56,846 75,111 6,420 81,531 -24,685
2018 26,672,044 96,763,123 56,302 910 26 57,238 80,504 6,603 87,107 -29,869
2019 27,309,288 97,752,633 59,208 0 17 59,225 86,266 6,784 93,050 -33,825
2020 27,974,058 98,797,798 62,398 0 14 62,412 92,457 7,105 99,562 -37,150
2021 28,563,734 99,701,265 65,890 0 26 65,916 98,817 7,488 106,305 -40,389
Source: NHIP (2012)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
0
10000
20000
30000
40000
50000
60000
70000
80000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Revenues Total Expenditures (a+b)
Expenditure a: Benefit Payments Expenditure b: Operational Expenses
Financial Balance Reserves
Figure 27: Financial Balance and Reserves of NHIP, 2000-2010 (in million PhP)
Source: PhilHealth Annual Report (2000-2010)
-150000
-100000
-50000
0
50000
100000
150000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total expenses Total income Fund balance
Figure 28: NHIP Fund Projections, 2011-2021
Source: NHIP (2012)
93 CHAPTER 7: FINANCIAL / ACTUARIAL SUSTAINABILITY
The memberships projections show progress in coverage, considering a growth of
1.18% per year. On the other hand, the total population would grow at a rate higher
than 1.7%. With a size of 3.19 members per household, the total coverage of the
program would be around 88.11% in 2021.
Table 29: Fund Status and Actuarial Reserve Projections, 2010-2021 under
Scenario 1
Year
Fund
Balance
Reserves Limit Reserve Fund
Next 2 Years Total Expense (as defned by RA 7875)
2010 98,035 96,971 53,556
2011 108,099 112,325 55,606
2012 108,383 125,639 48,551
2013 102,760 137,261 36,953
2014 92,041 147,781 20,587
2015 76,349 157,859 22
2016 56,376 168,639 0
2017 31,691 180,157 0
2018 1,822 192,611 0
2019 (32,003) 205,867 0
2020 (69,152)
2021 (109,542)
Source: NHIP (2012)
Figure 29: Fund Status and Actuarial Reserve Projections, 2010-2021
Source: NHIP (2012)
-600
-500
-400
-300
-200
-100
0
100
200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Scenario 5 Scenario 6A Scenario 6B Scenario 7
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
With regard to the fnancial position and sustainability of NHIP, it is important to add
the reserves accumulated in the fund. The reserve funds are established according to
the provisions of RA 7875. In 2000-2008, there was a constant growth of the funds
reserves, although the fnancial balance gradually declined and became virtually
negative in 2010, hence the fund balance stagnated (see Figure 27). Conversely,
according to the projections, the fnancial balance turns into defcit and the fund
balance steadily declines since 2011. By 2018, it will be depleted (see Figure 28).
In alternative scenarios
17
, the actuarial report notes continuous fnancial
unsustainability of the fund. Changing the structure of taxes and increasing wages
subject to contribution ceilings, among other assumptions, the projected scenarios
show insuffcient revenues to meet the expenses of the program. In all cases, the
fund survives up to 2016 at most (see Table 29 and Figure 29).
In sum, the various actuarial scenarios, projected by NHIP, demonstrate that
PhilHealth NHIP is not fnancially sustainable in the long term unless reforms are
rapidly implemented. Among the problems faced are the following:
The increasing trend in payments to non-paying members and the resulting 1.
increase in the beneft to payments ratio (Jowett and Hsia, 2005);
The irregularity of premiums payments by the IPP (about two thirds of the 2.
members of this component do not pay their premiums regularly (Jowett and
Hsia, 2005) ;
The incorporation of additional benefts (such as case rates) and of new SP 3.
benefciaries without any corresponding additional revenues;
No change in the contribution rate, which is around 3%, a low percentage in 4.
comparison with other international social security health schemes;
The growth of fraudulent payments (between 10-20% of beneft claims); and 5.
The deterioration of the fnancial statement and fund reserves in recent years. 6.
There are serious concerns on the long-term fnancial sustainability of PhilHealth
based on the NHIP actuarial study. There are scenarios that do not involve drastic
reforms in the scope of programs and those that they are funding. Therefore, it is
imperative to boost the collection effciency, the compliance rate and the number of
months paid in order to boost revenues and to impose mandatory coverage in the
informal sector, overseeing the persistence and continuity of premiums payment by
its members.
The next chapter will show that the challenges faced by the Philippiness health
system in the medium term are even more important than those raised here.
17 The assumptions used in different scenarios are summarized in Appendix Table 13.
95
CHAPTER 8: CONCLUSIONS AND POLICY
RECOMMENDATIONS
This section summarizes the major fndings and challenges in the Philippines health
system in relation to each of the main aspect included in the diagnosis performed,
namely, organization, coverage, benefts, social solidarity and gender equity,
effciency, and fnancial sustainability. The main challenges spotted may be grouped
in seven dimensions:
Coverage expansion
Improvements in effective availability and use of health services
Equity improvement in the coverage and use of services, particularly centered
on target mechanisms
Widening and distributive impact of health services fnancing, whether
contributory or non-contributory and the need to reduce out-of-pocket
expenses
Redefnition of system organization, decentralization of services, territorial
equity and the LGUs role
Improvements in the effciency of the use of resources and management of the
system
Achieving adequate and sustainable fnancing in the health system
These dimensions are not independent from each other and should be treated as
a whole. The coverage expansion and higher availability of services in the different
regions of the country depend on the organization of the system and, more importantly,
on the level and type of fnancing, which ultimately leads to its distributive impact.
Additionally, the solution of many of the health-system problems result from general
development issues rather than those pertaining to the health sector.
The government has put into motion major initiatives to increase the coverage of
health insurance and to modernize public sector institutions. In turn, academia and
international organizations have published important studies with diagnoses and
reform proposals, which as a result, have enriched the debate. Some civil society
organizations seek to improve specifc aspects of the sector in behalf of the citizens.
Therefore, in addition to their own suggestions, the authors have incorporated
recommendations from other sources. They include opinions collected from the
valuable interviews done and the conclusions of reviewed documents. Particularly:
Solon et al (2003), Bodart (2007), GTZ Study (2007), ADB (2007), Manasan, (2009
and 2011), Acuin et al (2010), WHO (2010), DOH (2010), World Bank (2011), Orbeta
(2011), Capuno (2012), Llanto (2012), Diokno (2012) UNDP (2012), Banzon (2012-I),
Capuno (2012-I), Claudio (2012-I), Esguerra (2012-I), Ngunt-U (2012-I), Padilla
(2012-I), Patio (2012-I), Picazo (2012-I), Rosadia (2012-I), Solon (2012-I), Universal
Health Care Group (2012-I) and Untalan (2012-I).
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Coverage Expansion
Access to health services is undoubtedly an essential human right, an indispensable
prerequisite for poverty reduction, and for economic growth and development. Taking
into account the current health system situation and the governments goals, this
dimension should be considered the main challenge encompassing the others (which
should be considered, consequently, complementary).
Resources are scarce for the sector to ensure universal and equitable coverage for
the countrys population. It is true that the public sector policy has been aimed at
improving the health coverage of Filipinos by expanding PhilHealth. The progress has
been remarkable, but there is still a long road of reforms to meet the targets set.
As shown in actuarial studies, memberships projections show progress in coverage,
considering a growth of 1.18% per year from 2012 until 2021 (while the total
population would grow at a rate higher than 1.7%). With a size of 3.19 members per
household, the total coverage of the program would be around 88.11% in 2021. The
universal coverage is far more complex than ensuring membership (Untalan, 2012-I).
However, it is necessary to develop a strategy to effectively broaden coverage that
includes the different dimensions of the problem, presented as follows.
Improvements in Effective Availability and Use of Health Services
Suffciency is the degree by which the benefts provided by the program are adequate
to meet the needs of different benefciaries. It requires economic resources to
provide timely access to proper health care regardless of the economic situation of
individuals. There are no appropriate indicators to accurately measure suffciency
of benefts. However, these benefts encompass different health services usually not
used simultaneously by the same person; hence it is possible to have an approximate
assessment based on the fnancial protection provided by the program for specifc
services.
In fact, the structure of the benefts covered by NHIP in a minimum (or basic) package
imposes limits to the suffciency of such benefts. This means that it is only suffcient
for restricted types of care and treatments; however, in many cases, limited to services
in government hospitals. This makes us think about the real fnancial protection that
is being provided to its members and their dependents.
The classifcation of restrictions to the use of health services are as follows:
Supply-side barriers:
Limited and uneven number of accredited facilities 1.
Unaffordable health facilities-constraints on distance and related transportation 2.
costs
Inadequate supply of medicines in RHUs 3.
Lack or ineffective social marketing strategy 4.
97 CHAPTER 8: CONCLUSIONS AND POLICY RECOMMENDATIONS
Demand-side barriers:
Lack of fnancial resources (purchase medicines, pay for additional provider 1.
fees)
Lack of information on benefts, availment process 2.
Lack of resource to visit health facilities (transportation costs due to distance) 3.
Perception of poor quality of healthcare services. 4.
As a result of these barriers, the gap between the high percentage of the population
covered by PhilHealth and low percentage of its spending in the total is extremely
high and a sign of challenges to reach an effective universal health coverage. As
shown. There is an important gap between registered population and those who are
eligible to use the benefts. The population of the Philippines has grown considerably
in the last two decades. However, the health sector infrastructure has not kept up
with these changes.
The Philippines has ratios of nursing and midwifery, of dentistry and pharmaceutical
personnel of 1 to every 10, 000. This is in line with the upper middle income countries
or even going beyond their values. On the contrary, when focusing on the available
human resources in the LGUs, there has been some stagnation in the last few years.
An important issue affecting the health sectors human resources is the growing
migration of trained resources to other countries. The Philippines has become a major
source of health professionals to many countries because of their fuent English,
skills and training, compassion and patience in caring, which leads to a costly brain
drain, hurting the health sector. Additionally, improving compliance of the Employed
Sector Programs and expanding coverage of the informal sector under the IPP will not
be possible if the availment rate and the support ratio are not increased.
Recommendations:
To cover the existing gaps in service delivery capacity, particularly in some
regions, often the poorest and most underserved in the country.
To improve the availment rate, there is a need to upgrade the facilities of public
hospitals, RHUs and BHSs so as to increase the number of accredited public
health facilities.
To introduce material or career incentives in order to make the required medical
human resources remain in the Philippines.
Equity Improvements in the Coverage and Use of Services, Particularly
Centered on Target Mechanisms
With the present scope of SP, it should provide coverage to the last quintiles of
income distribution (the poorest 40% of the population of the country) so that it
would be in a scenario perfectly focused and completely covered as stated in the
program. The worsening socio-economic conditions of the population resulted from
an unfavorable economic cycle which might not result in a greater coverage although
it might refect a higher number of people that might not pay for coverage voluntarily.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
In this context, the ability of this component to have a countercyclical response is
strongly limited, reducing the possibilities of gaining access to health coverage for a
wide range of population sectors.
Additionally, coverage problems due to low voluntary adhesion to de IPP have to be
faced despite the signifcant weight of informal employment. This is not an exclusive
problem of the health system. Instead, it is related to employment, social protection
and taxation policies. Some Latin American countries have implemented simplifed tax
regimes for individual workers and small businesses that, under special conditions,
can include an additional contribution to access health insurance programs (as in
the case of Argentina, where there is a system known as monotributo) (Cetrngolo,
Gomez Sabaini and Velasco, 2012).
Recommendations:
It is critical to expand the coverage of the Sponsored Program of PhilHealth and
to improve the selection of benefciaries.
The NHIP should assign more resources to the SP in order to fnance health
services for the needy in a non-contributory fashion.
Implement a good centrally designed and managed targeting system
Expand coverage of informal workers to the IPP.
Encourage the participation of the civil society groups (e.g. religious bodies,
non-governmental organizations, cooperatives) that play a key role in promoting
the principles of equity and solidarity in society. They should participate in
national dialogues to further the extension of coverage to excluded groups and
to explain the functioning of the system and the use of health services.
Widening and Distributing Impact of Health Services Financing, Whether
Contributory or Non-contributory and Reduce the Out-of-pocket Expenses
This dimension is closely related to the previous one. The limited coverage of the
benefts explains the growing share of out-of-pocket expenses in total health spending,
making the health system regressive. In addition, the high out-of-pocket spending
also explains why the use of NHIP services is low for SP members. It is an important
barrier to accessing health care, especially for the very poor that requires hospital
services.
The effective health coverage is inadequate and uneven. It worsens the inequalities
that characterize the Philippines. The poor are the most vulnerable because they are
less able to recover from the fnancial consequences of the out-of-pocket payments
and the loss of incomes is associated with ill health. Overall fnancing for health is
regressive in the Philippines. A major portion of the limited benefts offered by the
public sector is received by the less needy. Meanwhile, direct payments are high and
worsen the inequity of the system.
Also, maternal care seems to be inadequate. Emergency Obstetric and Newborn Care
facilities are not enough and are not utilized by the poorest women who are actually
the ones with the highest mortality rate.
99 CHAPTER 8: CONCLUSIONS AND POLICY RECOMMENDATIONS
Meanwhile, payment mechanisms differ on the basis of the services provided. The
case of the outpatient package services provided by RHUs is usually free of charge.
On the other hand, the case of the special benefts packages provided by the health
care providers and set by PhilHealth are paid per case. In turn, inpatient care
incorporates a fee-for-service (FFS) regime, in which public and private hospitals
have the possibility to charge over the fees (balanced billing).
There have been important improvements in recent years. Since 2011, PhilHealth
has established fxed rates to a number of special packages of benefts for medical
and surgical procedures, eliminating the discretionary collections and making
information transparent to patients. Since 2010, the sponsored members have case
rates of No Balance Billing (NBB), permitting these benefciaries to gain access to
health treatments and services with no additional cost to public hospitals. Finally,
since 2012 some medicines have been included in the out-patient beneft package
through the initiative called Primary Care Beneft. It has three components. The frst
is for diagnostics and outpatient services in the clinic. The second covers maintenance
drugs for hypertensions and diabetes. Finally, the third one addresses catastrophic
illnesses.
Recommendations:
Improve service coverage. The outpatient consultation and routine diagnostic
services should be made available to all members in order to achieve equity
across programs. Given that drugs and medicines account for roughly 50% of
total out-of-pocket health expenditures of households, the inclusion of drugs
and medicines in the outpatient beneft package needs to be reinforced.
Allow LGUs to play an important role in the enrollment of informal sector workers
under the IPP. LGUs should collect the premium contributions of the non-poor
informal sector workers and should remit them to PhilHealth. Incorporate
incentives for LGUs to play this role.
Shift the payment system from fee-for-service to a mix of capitation and case-
payments, and ban balance billing to increase the PhilHealth support ratio.
These changes should be made available not just for the Sponsored Program
but for the other programs as well.
Consider the inclusion of family planning programs in PhilHealth benefts.
Organization, Decentralization of Services, Territorial Equity and the LGUs
Role
The Philippines health system is funded from a mix of sources including payroll
contributions from both employees and employers in the formal sector of the
economy; payment of premiums from the self-employed, informal workers and
OFWs; general fscal revenues that fnance health insurance for the poor (sponsored
program) and public programs. At the LGU level, fnancing is fragmented across
provinces, municipalities and cities, with each LGU fnancing its own facilities. LGUs
receive: a) part of the taxes from the national government; b) the internal revenue
allotment (IRA); and c) other revenues of the LGUs allocated to the sector such as
PhilHealth capitation and reimbursements and grants from external sources. The
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
confuence of various sources reveals a signifcant fragmentation in the fnancing
of the health system. In addition, benefciaries confront out-of-pocket payments for
fees, copayments and drugs, whereas the highest-income households pay voluntary
premiums to access private health coverage from HMOs.
Since the devolution of health services by the Local Government Code in 1991, the
provision of such services, particularly at primary and secondary levels, is in charge
of LGUs hence, health is managed through provincial, municipal and Barangay local
government offces. The provincial governments are responsible for the provincial
and district hospitals while the municipal governments are responsible for the RHUs
and BHSs. To prevent the likely negative effects of institutional fragmentation,
special importance should be attached to the relationships among programs, among
different levels of government and among its institutions.
In the Philippines, over the last two decades, there has been a deep and unfnished
discussion on the benefts and diffculties of heath decentralization. The challenge
is to achieve a weighted position that takes into account the particular conditions of
each case. In order to achieve the most signifcant changes to the citizens well-being,
the said challenge will fnd pragmatic answers, encouraging the search for solutions
to improve the provision of goods and services by the State. To this end, it is essential
to consider the degree of regional productive disparity within the country because
it imposes serious limits to the working and fnancing of decentralized services,
particularly to the provision that affects equity in the healths case.
Finally, taking into account the characteristics of the Philippines, it has to be
noted that the country still lacks a comprehensive program that assists victims of
natural disasters. This pushes poor people to live in dangerous areas, more often
in the makeshift lodgings. Agriculture, wherein two thirds of the income of the poor
depends, is the most vulnerable to climate changes and to the impact of plagues and
diseases. In conclusion, this is an important concern to address because disasters
cause serious damage and loss of property, especially to the poor, and destroy their
only means of living. If they do not receive assistance, the risk of falling in a perpetual
poverty trap is high.
Recommendations:
Prevent the possible negative effects of the institutional fragmentation by
coordinating with different programs and with the different levels of the
government and their entities.
Strengthen the DOHs coordinator role, accompanied by the administration of
fnancial resources for they are the ones that take up the guiding role of the
system.
Search new methodologies of transferring of resources, which makes up for
the differences among the different regions. Also, incorporate incentives that
allocate spending in order to improve service provision for the needy.
In the scheme of transfers to LGUs, evaluate the possibility of incorporating
the performance-based grants, as positive incentives, to local efforts in order
to improve governance, local revenue mobilization, and matching grants that
equalize fscal capacities of local governments.
101 CHAPTER 8: CONCLUSIONS AND POLICY RECOMMENDATIONS
At the same time, accountability of LGUs has to be improved.
Strengthen plans to foresee natural disasters and to mitigate their effects.
Implement a program that envisions to assists victims of natural disasters,
extending assistance particularly to those poorest households.
Improvements in the Effciency of the Use of Resources and Management of
the System
PhilHealth collects premiums, accredits providers, determines benefts packages
and provider payment mechanisms, processes claims, and reimburses providers
and benefciaries. Thus, PhilHealth is responsible of supervision, follow-up and
monitoring of the NHIP. The salaries and other operating expenses are fnanced from
premium collection and revenues from the funds investment returns.
PhilHealth pools fund from all sectors of society: formally employed, direct payments
from LGUs, national government budget, and voluntary premiums. All collected
resources are managed in a single fund, wherein its performance has resulted in
a series of cross-subsidies. As opposed to the PhilHealth risk pool, private health
insurance has only limited risk-pooling capacities because of smaller groups.
Additionally, HMOs have incentives to adversely select its members, prioritizing the
healthier people in the pool. As a result, it leads to the cream-skimming effect.
Recommendations:
Reinforce the Fact Finding Investigation and Enforcement Department to control
and supervise the system and to prevent the proliferation of adverse selection
practices of benefciaries, fraudulent practices by providers and the cleansing of
the list of benefciaries in the system.
Strengthen initiatives that fght against fraud and abuse of problems. Enhance
PhilHealth enforcement activities by accessing third party information from
other government agencies.
Improve the regulation in the medicines-producing-and-distributing sector by
taking into account its particular impact on out-of-pocket expenses.
Improve both the health regulation and the system of information of the private
sector regarding their existing coverage plans and their provision of benefts.
Achieving Adequate and Sustainable Financing in the Health System
The arguments developed in this study have aimed to show that the fnancing and
resources of the Philippines health system are inadequate to reach the goal of
accessing the universal coverage. This is the most important challenge that exceeds
the health policies scope. Even if the major improvements are not considered in the
coverage, it is expected that the resources demands are rising.
The combination of low public spending on health and high share of private spending
is the most critical aspect of the system that scarcely meet its objective of developing
a universal insurance coverage for all Filipinos. The high private spending means
that the poorest households will depend on the expansion and effective range of
subsidized coverage programs. In turn, the lower middle-income households will
have serious diffculties in achieving the universal coverage.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
The new Sin Tax Law will lead to a signifcant increase in the health budget. It is
essential to keep this trend of increasing funding, especially considering that the
success of the policy against the tobacco and alcohol consumption will reduce the
funding of the sector. Additionally, the new resources should be prevented from
replacing (total or partially) the existing ones. However, the challenges posed by the
health system to achieve universal coverage will require increased funding.
Additionally, based on the NHIP actuarial study, there are serious concerns on the
long-term fnancial sustainability of PhilHealth. These are under scenarios that do
not involve drastic reforms in the scope of programs that they are funding.
Recommendations:
Increase public spending on health.
Examine the possibility of increasing payment fees on salaries allotted to the
fnancing of the employed program.
Increase the collection effciency, the compliance rate and the number of
months paid in order to boost revenues and to impose mandatory coverage
in the informal sector, overseeing the persistence and continuity of premiums
payment by its members.
Design public policies that predict future changes in the demand of intervention.
It has to be motivated by the demographic changes. Moreover, the epidemiological
profle of the population needs to be done as well.
Final Thoughts
Despite the effort and progress and the signifcant reforms made towards the
improvement of the Filipinos health coverage, there is still a long way to solve equity
problems. According to the principle of solidarity, everyone should have access to an
adequate package of health care and no family should be catastrophically burdened
by the cost of illness. The principle of solidarity is directly related to the equity
in fnancing and fnancial risk-protection. The former means that people should
contribute on the basis of their ability to pay rather than to whether they fall ill. On
the contrary, if the latter is achieved, it ensures that the cost of care does not put
people at risk to fnancial catastrophe.
The Philippiness health system is highly fragmented. There are three types of
fragmentation that can be distinguished in the fnancing of health systems that affect
equity in access to services. First, the problems associated with the high levels of
out-of-pocket spending on health should be considered. Second, the fragmentation
that comes from the differences of those within formal social security coverage from
those with work in the informal sectors of the economy should also be refected upon.
Finally, the territorial fragmentation that derives from the existence of health systems
at the sub-national level, with different levels of coverage refecting the socioeconomic
conditions of each place, should also be considered a factor. Thus, the inhabitants
of the same country have different levels of coverage in the public sector due to its
geographical location.
103 CHAPTER 8: CONCLUSIONS AND POLICY RECOMMENDATIONS
In order to reach the ambitious universal and target equitable health coverage, many
complex tasks are required. This needs to be considered as a long-term vision to be
fulflled after lengthy and diffcult path of reforms. Given the social consensus on this
vision, the path should consider the fnancial management required in order to move
in a certain direction. Furthermore, there should also be policy space to address
these reforms. On the other hand, in the particular case of the Philippines, it must
be considered that many of the problems of the system are part of the more general
problem of development.
It is also necessary to make two additional clarifcations. First, the shortage of
resources is not a problem unique to health but it is the result of a more general
concern about the diffculties that the Philippines is facing with the increasing tax
burden. Second, it clearly refects that this is not only a matter of increasing the
available resources to the sector but a matter of effciently using them.
In order to acquire reforms, there have been steps justifed by the diffculties
encountered in the course of this research. For instance, the contributory funding is
a factor of tax systems that leads to fragmentation. However, even if it is desirable to
exclusively address the funding with general taxation, there are diffculties that the
Philippines faces in raising taxes. It forces to keep tax burdens on wages during a
transition (of unpredictable duration) so that the cost of maintaining the segmentation
of the sector is longer than the desired ones. There is no doubt that the different
aspects of health sector reform should be analyzed as a whole. And this reform has
to be put in the broader context of the economic growth and social development of
the Philippines.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
APPENDICES
STATISTICAL TABLES
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S
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s
,

D
O
H
.
105 APPENDIX: STATISTICAL TABLES
A
p
p
e
n
d
i
x

T
a
b
l
e

2
:

P
o
p
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p
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p
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t
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S
t
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s

O
f
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(
2
0
1
1
)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
A
p
p
e
n
d
i
x

T
a
b
l
e

3
:

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107 APPENDIX: STATISTICAL TABLES
Appendix Table 4: Household Population by
Religious Affliation and by Sex, 2000

Religion Both Sexes Male Female
Total 76,332,470 38,416,929 37,915,541
Roman Catholic 61,862,898 31,197,055 30,665,843
Islam 3,862,409 1,907,721 1,954,688
Evangelical 2,152,786 1,067,708 1,085,078
Iglesia ni Cristo 1,762,845 889,774 873,071
Aglipayan 1,508,662 765,799 742,863
Seventh Day Adventist 609,570 301,699 307,871
United Church of Christ in the
Philippines
416,681 209,647 207,034
Jehovahs Witnesses 380,059 184,489 195,570
Other Protestants 340,765 169,053 171,712
United Methodist Church 305,690 152,516 153,174
Convention of the Philippine Baptist
Churches
217,806 106,462 111,344
Church of Jesus Christ of the Latter Day
Saints
181,485 89,789 91,696
Bible Baptist 176,112 86,462 89,650
Tribal religion 164,080 84,399 79,681
Philippine Episcopal Church 161,444 82,869 78,575
Association of Fundamental Baptist
Churches
in the Philippines 148,776 72,796 75,980
Southern Baptist 116,546 58,585 57,961
Philippine Benevolent Missionaries
Association
107,890 54,200 53,690
Other Baptist 69,158 33,883 35,275
Buddhist 64,969 32,257 32,712
Iglesia Evangelista Methodista en las
Islas Filipinas
54,709 27,240 27,469
Lutheran Church - Philippines 46,918 23,846 23,072
Missionary Baptist Churches of the
Philippines
25,547 12,807 12,740
Other Methodist 24,520 11,861 12,659
Salvation Army, Philippines 12,596 6,239 6,357
Association of Baptist Churches in
Luzon,
Visayas and Mindanao 11,476 5,668 5,808
International Baptist Missionary
Fellowship
7,452 3,670 3,782
None 73,799 38,985 34,814
Unknown 351,632 182,210 169,422
Source: National Statistics Offce (2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
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109 APPENDIX: STATISTICAL TABLES
Appendix Table 6: Labor Force Participation Rate and
Employment Status: Total, Urban and Rural, 2001 to 2010 (in
thousands and %)
Year/
Area
Labor Force
Participation
Rate (Percent)
Total Labor
Force
Labor Force by Employment Status
Employed Unemployed
Number Percent Number Percent
Philippines
2001 67.1 32,809 29,156 88.9 3,653 11.1
2002 67.4 33,936 30,062 88.6 3,874 11.4
2003 66.7 34,571 30,628 88.6 3,936 11.4
2004 67.5 35,862 31,613 88.2 4,249 11.8
2005 64.7 35,287 32,312 92.2 2,748 7.8
2006 64.2 35,465 32,962 92.0 2,829 8.0
2007 64.0 36,213 33,560 92.7 2,653 7.3
2008 63.6 36,805 34,089 92.6 2,716 6.8
2009 64.0 37,892 35,061 92.5 2,831 7.5
2010 64.1 38,894 36,035 92.6 2,859 7.4
Urban
2000 63.0 15,147 13,022 86.0 2,125 14.0
2001 64.7 16,013 13,762 85.9 2,251 14.1
2002 65.2 16,581 14,210 85.7 2,371 14.3
Rural
2000 66.8 15,764 14,430 91.5 1,334 8.5
2001 69.4 16,796 15,394 91.7 1,402 8.3
2002 69.7 17,354 15,851 91.3 1,503 8.7
Source: National Statistics Offce (2011)
Notes:
1. Data were revised based on NSCB Resolution 9, Series of 2009 which prescribes the use of the
average estimates of the four LFS rounds for the annual fgures.
2. U rban and rural classifcation was no longer applied starting the July 2003 round of the LFS.
3. Details may not add up to totals due to rounding.
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Appendix Table 7: Selected Health Output Indicators, 1998-2006
1998 1999 2000 2001 2002 2003 2004 2005 2006
% of pregnant women with 3
or more pre-natal visits
59.4% 65.6% 64.8% 62.9% 60.5% 64.3% 64.7% 62.3% 61.5%
% of pregnant women given
tetanus toxoid vaccination at
least twice
68.8% 59.4% 62.5% 54.2% 54.3% 59.6% 60.0% 58.8% 59.1%
% of lactating mothers given
Vitamin A
49.1% 54.6% 57.0% 55.3% 52.9% 61.6% 53.2% 54.7% 59.3%
% of livebirths attended by
medical professional
69.0% 69.0% 70.0% 68.7% 68.0% 70.0%
% of fully immunized children
under 1
84.8% 87.9% 86.5% 81.7% 76.7% 83.7% 84.8% 83.7% 82.9%
% of infants given 3rd dose
of Hepa B
37.3% 45.2% 6.2% 41.9% 38.5% 45.2% 45.6% 42.9% 72.9%
% of diarhhea cases amongst
children under 5 given ORS
28.4% 25.9% 24.1% 22.4% 17.7% 17.8% 15.5% 14.2% 14.0%
% of pneumonia cases
amongst children under 5
given treatment
94.7% 94.5% 93.9% 94.2% 94.7% 97.3% 99.9% 95.3% 96.0%
% of children under 1 given
Vitamin A
72.8% 74.0% 76.9% 74.6% 74.7% 89.8% 79.2% 80.0% 81.0%
% of children between 1 and
5 given Vitamin A
89.6% 84.1% 101.3% 95.1% 94.1% 106.1% 111.1% 97.8% 95.7%
TB morbidity rate a/ b/ 206.7 203.9 174.1 149.9 154.1 120.3 133.3 137.1 169.9
Malaria morbidity rate a/ 96.8 91.8 66.6 39.1 50.3 36.5 24.9 43.3 27.6
Source: Manasan (2011) based on Field Health Service Information System, various years
*Data shown for entire Philippines; data by province and city are also available
a/ per 100,000 population
b/ respiratory plus other forms of TB
111 APPENDIX: STATISTICAL TABLES
Appendix Table 8: Live Births, Total deaths, Deaths
under One Year, Maternal Deaths and Fetal Deaths,
1976 to 2008
Year Live Births
Total
Deaths
Deaths un-
der 1 year
Maternal
Deaths
Fetal
Deaths
1976 1,314,860 299,861 74,792 1,862 14,865
1977 1,344,836 308,904 76,330 1,909 14,589
1978 1,387,588 297,034 73,640 1,734 14,365
1979 1,429,814 306,427 71,772 1,634 14,586
1980 1,456,860 298,006 65,700 1,609 13,965
1981 1,461,204 301,117 64,415 1,542 13,343
1982 1,474,491 308,758 61,665 1,425 13,465
1983 1,506,356 327,260 64,267 1,502 14,780
1984 1,478,205 313,359 56,897 1,379 11,884
1985 1,437,154 334,663 54,613 1,489 8,948
1986 1,493,995 326,749 52,263 1,573 8,400
1987 1,582,469 335,254 50,803 1,611 10,515
1988 1,565,372 325,098 47,187 1,745 10,641
1989 1,565,254 325,621 43,026 1,579 11,423
1990 1,631,069 313,890 39,633 1,307 11,915
1991 1,643,296 298,063 34,332 1,144 10,776
1992 1,684,395 319,579 36,814 1,394 8,631
1993 1,680,896 318,546 34,673 1,548 9,338
1994 1,645,011 321,440 31,073 1,791 9,291
1995 1,645,043 324,737 30,631 1,488 9,731
1996 1,608,468 344,363 30,550 1,557 9,693
1997 1,653,236 339,400 28,061 1,513 9,706
1998 1,632,859 352,992 28,196 1,579 6,232
1999 1,613,335 347,989 25,168 1,348 9,841
2000 1,766,440 366,931 27,714 1,698 10,360
2001 1,714,093 381,834 26,129 1,768 9,625
2002 1,666,773 396,297 23,778 1,801 9,341
2003 1,669,442 396,331 22,844 1,798 8,986
2004 1,710,994 403,191 22,557 1,833 8,935
2005 1,688,918 426,054 21,674 1,732 10,351
2006 1,663,029 441,036 21,764 1,721 8,458
2007 1,749,878 441,956 21,720 1,672 8,191
2008 1,784,316 461,581 22,351 1,731 8,306
Source: National Statistics Offce (2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Appendix Table 9: Number of Hospitals by Type and by Region, 2000 to 2010
Year Philippines Region
NCR CAR I II III IV-A IV-B V VI VII VIII IX X XI XII XIII ARMM
Government Hospitals
2000 623 49 24 36 38 43 98 50 40 56 48 30 17 34 20 33 7
2001 640 50 32 37 39 51 80 50 50 56 48 28 23 32 20 33 11
2002 661 51 27 38 38 56 95 50 53 57 48 24 26 33 20 34 11
2003 662 54 30 37 37 53 97 49 53 60 49 25 30 18 23 35 12
2004 657 51 37 40 36 59 98 49 57 42 40 30 30 21 24 33 10
2005 702 59 37 39 35 58 66 34 50 60 60 48 29 34 16 25 32 20
2006 719 56 38 40 40 61 67 35 51 62 60 49 31 32 19 25 33 20
2007 701 51 37 40 38 60 65 35 50 61 60 48 31 36 19 26 33 11
2008 711 50 36 41 43 59 64 37 50 62 60 46 33 36 19 27 35 13
2009 723 51 34 41 43 60 67 38 48 62 60 50 31 36 20 27 35 20
2010 730 51 38 41 45 60 67 37 48 62 59 51 29 37 20 28 35 22
Private Hospitals
2000 1089 130 20 81 45 112 179 84 23 46 30 44 56 134 74 26 5
2001 1068 127 21 82 44 134 166 77 19 46 27 43 64 119 71 25 3
2002 1077 127 18 87 42 136 176 73 19 46 28 41 63 123 69 26 3
2003 1057 129 20 84 45 137 177 72 19 46 27 40 65 93 72 25 6
2004 1068 141 20 85 43 136 179 75 20 47 24 42 70 85 74 21 6
2005 1136 157 20 85 37 144 172 23 74 29 48 27 42 71 95 83 22 7
2006 1202 166 19 83 51 140 192 29 72 24 50 30 44 72 119 79 24 8
2007 1080 132 19 78 46 141 168 25 67 24 47 24 41 72 89 77 22 8
2008 1073 128 19 80 44 138 168 26 66 24 47 24 42 73 88 76 22 8
2009 1098 144 17 80 46 138 169 27 66 24 46 24 41 73 92 79 23 9
2010 1082 132 19 82 46 138 167 27 61 24 46 25 40 72 90 78 24 11
Source: National Statistics Offce (2011)
113 APPENDIX: STATISTICAL TABLES
Appendix Table 10: Damages Caused by Major Natural Disasters and
by Man-made Disasters, 2010
Disasters Occurrence Casualties Affected House Damaged
Cost of
Damages
(million
pesos)
Dead Injured Missing Families Persons Total Partial
2010 556 766 1,612 148 1,315,069 6,386,781 109,133 186,313 25,281.5
A. Natural Incidents 234 59 57 5 736,838 3,600,799 484 1,766 12,684.2
Earthquakes 127
Volcanic Activity 9 1 2,834 14,161 12.3
Landslide 28 18 19 756 3,998 51 36 9.3
Flashfoods/Flooding 47 17 10 3 117,972 593,796 115 855 133.0
El Nino 1 477,868 2,389,340 12,107.1
Soil Erosion 1 1 3
Tornado 8 1 217 1,109 49 204 0.1
Strong Winds 3 2 110 433 29 81 1.4
Whirlwind 1 3 125 625 33 92 1.1
Pest Infestation 1
Thunderstorm 1 225 997 44 181
Continuous Rains 2 16 2 2 136,731 596,340 163 317 419.9
Lightning/Thunderstorm 5 6 17
B. Typhoons 11 136 133 85 543,311 2,596,587 103,334 184,082 12,392.0
Destructive 2 133 133 50 542,867 2,594,367 103,334 184,082 12,392.0
Non-destructive 9 3 35 444 2,220
C. Human-induced
Incidents
311 571 1,422 58 34,920 189,395 5,315 465 205.4
Structural Fires 132 70 79 3 11,822 58,801 5,260 242 205.4
Sea Mishaps 25 16 26 50
Air Mishaps 5 19 10 3 8 34 8
Vehicular Accidents 57 211 1,017 7
Armed Confict 17 34 39 6,601 34,772 7 220
Epidemic/Disease Out-
break/ Viral Contamination
15 139 14,139 83,910
Bomb/Grenade Explosions 29 28 187 2 0.1
Mining Incidents 1 1
Fuel/Chemical Leak/Gas
Poisoning
4 8 28 2,000 10,000
Coal Spill 1
Oil Spill 1
FishKill 1
Electrocution 1 7 1
Drowning 8 19 2
Mountain Climbing 1 1 3
Food Poisoning 3 2 128
Collapsed Structure 10 16 32 350 1,750 33 1
Source: National Statistics Offce (2011)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Appendix Table 11: Government Health Expenditures by Use of Fund and
by Type of Expenditure, 2005
SOURCE OF FUND AMOUNT (in million PhP) SHARE (%)
PS MOOE CO Total PS MOOE CO
DOH and its Attached Agencies 6,991 6,707 67 13,764 50.8 48.7 0.5
Personal Health Care 4,787 4,013 34 8,834 54.2 45.4 0.4
Public Health Care 468 1,886 22 2,376 19.7 79.4 0.9
Others 1,736 808 10 2,555 67.9 31.6 0.4
General Administrative and
Operating Cost
1,625 760 10 2,395 67.8 31.7 0.4
Research and Training 111 49 0 160 69.5 30.5 0
Other National Agencies 3,437 2,623 26 6,086 56.5 43.1 0.4
Personal Health Care 2,604 1,845 22 4,471 58.2 41.3 0.5
Public Health Care 172 167 0 339 50.6 49.3 0.1
Others 661 612 4 1,276 51.8 47.9 0.3
General Administrative and
Operating Cost
612 589 3 1,204 50.8 49.0 0.3
Research and Training 49 22 0 71 68.8 31.0 0.2
Local Government 16,028 6,748 495 23,271 68.9 29.0 2.1
Personal Health Care 3,994 1,87 145 6,008 66.5 31.1 2.4
Public Health Care 7,457 3,093 269 10,819 68.9 28.6 2.5
Others 4,577 1,785 81 6,443 71.0 27.7 1.3
General Administrative and
Operating Cost
4,577 1,785 81 6,443 71.0 27.7 1.3
Research and Training 0 0 0 0
Source: National Health Accounts (2005)
Note: DOH: Department of Health; PS: Personal Services; MOOE: Maintenance and Other Operating Expenses; CO: Capital Outlay,
no year
115 APPENDIX: STATISTICAL TABLES
Appendix Table 12: Early Childhood Mortality Rates by Region, 2003 and 2008
Infant Mortality Rate Child Mortality Rate
Under-fve Mortality
Rate
Region 2003 2008 2003 2008 2003 2008
NCR National Capital Region 24 22 8 3 31 24
CAR Cordillera Administrative 14 29 20 -2 34 -31
I Ilocos 29 24 11 2 39 26
II Cagayan Valley 28 38 8 -8 35 -46
III Central Luzon 25 24 6 5 31 29
IV-A CALABARZON 25 20 6 8 31 28
IV-B MIMAROPA 44 37 25 13 68 49
V Bicol 28 19 15 16 43 34
VI Western Visayas 39 39 11 5 50 43
VII Central Visayas 28 31 11 4 39 35
VIII Eastern Visayas 36 45 22 19 57 64
IX Zamboanga Peninsula 27 14 17 17 43 31
X Northern Mindanao 38 19 11 8 49 27
XI Davao 38 34 10 10 47 44
XII SOCCSKSARGEN 27 23 10 11 37 34
XIII Caraga 35 21 14 10 49 30
ARMM Muslim Mindanao 41 56 33 40 72 94
Source: National Health Accounts (2010)
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Appendix Table 13: Assumptions under Different Projected Scenarios
Scenario Assumptions
Scenario 1 Status Quo:
2.5% contribution rate
PhP 4,000 salary foor
PhP 30,000 salary cap
Scenario 2 Increase in benefts (expanded case rates and Access benefts)
Scenario 3 New premium structure:
3% contribution rate
PhP 7,000 salary foor
PhP 50,000 salary cap
Scenario 4A Increase in contribution & benefts with discounts:
PhP 600 in CY 2012 and PhP 1,200 in CY 2013 for LGU-Poor
PhP 1,200 in CY 2012 and 2013 for IPP and OWP
Allowance for administrative expense (12% of collection and 3% of interest
income)
Scenario 4B
Allowance for administrative expense (10% of collection and 3% of interest
income)
Scenario 4C Allowance for administrative expense from 4% to 5%
Scenario 5 Decrease in membership for LGU-Poor by 50% in CY 2014
Scenario 6A Increase in minimum annual contribution to PhP 3,000 in CY 2016
PhP 9,000 salary foor at 3% contribution rate
No decrease in LGU-Poor membership
Scenario 6B Increase in minimum annual contribution to PhP 3,600 in CY 2016
PhP 10,000 salary foor at 3% contribution rate
No decrease in LGU-Poor membership
Scenario 7
Increase in minimum annual contribution to PhP 3,600 and contribution rate to
3,5% in CY 2016
PhP 9,000 salary foor
No decrease in LGU-Poor membership
Source: NHIP (2012)
117
LIST OF INTERVIEWEES
(Interviews are cited in the text by the last name of the person interviewed, and
2012-I).
Government Agencies
PHILHEALTH
Dr. Eduardo Banzon, President and CEO
Atty. Alexander Padilla, Chief Operating Offcer
Lemuel Untalan, Senior Manager, Corporate Planning Department
Dr. Shirley Domingo, Vice President, PRO NCR-Rizal

NATIONAL ANTI-POVERTY COMMISSION (NAPC)
U/Sec. Patrocinio Jude Esguerra, National Anti-Poverty Commission

DEPARTMENT OF HEALTH
Dr. Lilibeth C. David, Director IV, Health Policy Development and Planning
Bureau
Fely Mariano, Bureau of Health Facilities and Services

DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT
Undersecretary Alicia Bala

DEPARTMENT OF BUDGET AND MANAGEMENT
Director Cristina Clasara
Director Dante De Chavez
PHILIPPINE INSTITUTE OF DEVELOPMENT STUDIES
Dr. Oscar Picazo

International Institutions
WORLD HEALTH ORGANIZATION
Dr. Soe Nyunt-U, Country Representative

WORLD BANK
Dr. Bobby Rosadia, Health Specialist

HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Private Sector/Health Maintenance Organizations
ASSOCIATION OF HEALTH MAINTENANCE ORGANIZATION OF THE PHILIPPINES,
INC. (AHMOPI)
Mr. Carlos Da Silva, President, - FES Offce
Non-Governmental Organizations
Dr. Sylvia Claudio, Executive Director, of LIKHAAN and UP Center for Women
and Studies
Ms. Princess Nemenzo, Executive Director of Womens Health-Philippines
Mr. Patrick Patino, Executive Director of Institute for Popular Democracy
Academia
UNIVERSITY OF THE PHILIPPINES SCHOOL OF ECONOMICS
Dr. Joseph J. Capuno
Dr. Orville Solon

UNIVERSTY OF THE PHILIPPINES-NATIONAL INSTITUTE OF HEALTH/ UNIVERSAL
HEALTH CARE STUDY GROUP
Dr. Alberto Romualdez, Jr., MD
Dr. Ernesto Domingo, MD
Dr. Ramon Paterno, MD, MPH
Dr. Cecilia S. Acuin, MD, PhD
119
LIST OF VALIDATION WORKSHOP PARTICIPANTS
We would like to acknowledge the invaluable help of the attendees of the validation
launch of this study on February 07, 2013 at the Hotel InterContinental Manila.
Their feed-back and input on the studys fndings not only enriched the discussion,
but also the fnal version of the present document.
In attendance were the following:
Government Agencies and International Organizations
PHILHEALTH/ PHIC
Ms. Nerissa Santiago, Vice President, Offce of the Actuary
Mr. Lemuel Untalan, OIC, Corporate Planning Offce
Department of Health (DOH)
Dr. Lilibeth C. David, Director IV, Health Policy Development and Planning Bureau
National Anti-Poverty Commission (NAPC)
Mr. Elmer Gomez
Ms. Susan Obedoza
Department of Budget and Management (DBM)
Ms. Yolanda Reyes
Ms. Micaela Alvarez
Department of Social Welfare and Development (DSWD)- Pantawid Pamilya
Mr. Jose Castillo
Ms. Jennifer Godio
Mr. Hussein Macarambon
Mr. Arjay M. Rosario
Department of Social Welfare and Development (DSWD)- Poverty Reduction Programs
Bureau (PRPB)
Ms. Mely S. Pansiunan
World Health Organization (WHO)
Ms. Lucille Nievera
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
Academe
University of the Philippines School of Economics
Dr. Albert Domingo
Universal Health Care Study Group / UP-Manila Institute of Health Policy and
Development Studies
Dr. Cecilia Acuin
Dr. Yves Aquino
Dr. Emer Faraon
Ms. Caterina Lagdameo
Ms. Stephanie Katalbas
Dr. Albert Romualdez
Civil Society Organizations
Action for Economic Reforms (AER)
Ms. Luz Anigan
Active Citizenship Foundation (ACF)
Mr. Marlon Cornelio
AKBAYAN! Citizens Action Party- Womens Committee
Ms. Ellen B. Barrel
Ms. Merci E. Gonzales
Ms. Jocelyn V. Padolina
Ms. Chona Prado
Ms. Raquel E. Tolentino
Action and Solidarity for the Empowerment of Teachers (ASSERT)
Mr. Fidel Fababier
Association of Health Management Organization of the Philippines, Inc. (AHMOPI)
Mr. Carlos da Silva
Construction and Building Workers Alliance of Caloocan (CBWAC) Alliance of
Progressive Labor (APL)
Mr. Mario D. Parde II
Center for Agrarian Reform, Empowerment and Transformation (CARET)
Ms. Imelda Limueco-Lucio
Center for Youth Advocacy and Networking (CYAN)
Mr. Alvin Quintans
Health Justice Philippines
Mr. Ralph Degollacion
121
Institute of Politics and Governance (IPG)
Ms. Lett Tabora
Kampanya Para sa Makataong Pamumuhay (KAMP)
Ms. Mercy L. Fabros
Gamut Sa Abot-Kayang Presyo
Ms. Ludy Casaa
Labor Education and Research Network (LEARN)
Mr. CJ Castillo
Ms. Hazel Dimacale
Mr. Yolanda P. Pinzon
Minimal Government Thinkers
Mr. Nonoy Oplas
Public Services Labor Independent Confederation (PSLINK)
Ms. Jillian Roque
WAGE-APL Women
Ms. Evelyn Ornopia
WomanHealth Philippines
Ms. Ana Maria Nemenzo
Ms. May-I Fabros
Ms. Mercy Fabros
HEALTH CARE IN THE PHILIPPINES: CHALLENGES AND WAYS FORWARD
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